Brennan Hawken, analyst at investment firm UBS, downgraded Morgan Stanley (NYSE:MS) from Buy to Hold, citing strong headwinds. Hawken also reduced Morgan Stanley’s price target from $110 to $84, adding that the company’s growth prospects are already priced in. As a result, MS shares slipped at the time of writing.
If you look into Morgan Stanley’s books, the company is doing fine. The company’s successful transition to a wealth management-centric model corroborates this. Furthermore, the fact that the company has thrived in a challenging environment and has maintained its dividend payments for 31 consecutive years is proof of this.
However, Hawken said the downgrade is due to the challenges the company might face going forward. This includes deposit sorting or yield-seeking behaviors by clients, intense talent competition, and a challenging revenue environment.
Notably, a decline in deposit sorting and rising interest rates have affected the company’s profitability potential. Hawken revised his Q3 earnings forecast downwards to $1.26 per share and trimmed his earnings projection for Fiscal Years 2023-25.
Is Morgan Stanley a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on MS stock based on two Buys, seven Holds, and two Sells assigned in the past three months, as indicated by the graphic above. Furthermore, the average MS price target of $95.88 per share implies a 21.12% upside potential.
