Goldman downgrades Morgan Stanley on valuation, less market skew

Goldman Sachs downgraded Morgan Stanley to Neutral from Buy with a price target of $105, down from $122. Other investment banks are more likely to benefit as we move further into the investment banking cycle, the analyst tells investors in a research note. The firm sees a faster growth rate for banks with a more capital markets skew as a percent of total revenue than Morgan Stanley. In addition, Morgan Stanley trades at a 2.0-times price-to-earnings premium to large bank peers, and at a 90th percentile price to tangible book value over the past decade versus the 70th percentile for peers, the firm says. While a high quality franchise, there are other stocks better positioned to benefit from the capital markets recovery, contends Goldman.