HSBC last night downgraded Morgan Stanley (MS) to Hold from Buy with a price target of $96, up from $90. The analyst increased earnings estimates and target prices for universal and superregional banks saying the outlook has improved. The firm is incrementally positive on banks and still sees a capital markets recovery but is more selective on brokers. HSBC cut earnings estimates notably for Morgan Stanley in recent months even as the share price has risen, leading to a material increase in the valuation despite a softening outlook for wealth management revenue, the analyst tells investors in a research note. Goldman Sachs (GS) remains the firm’s preferred way to play capital markets recovery.
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