It will be hard for Morgan Stanley to move much higher from current levels, according to UBS. The investment bank downgraded shares of Morgan Stanley to neutral from buy and slashed its price target to $84 from $110. This new forecast implies a gain of just 4.8% over the next 12 months. “Despite its successful transformation into a WM-focused firm with a solid, wirehouse peer leading growth profile, MS is confronted with obstacles such as deposit sorting/yield seeking, intense competition for talent, and a challenging revenue environment,” analyst Brennan Hawken wrote. Cash or deposit sorting refers to clients moving money from one type of account to another in a bid to get a better yield. Hawken noted that while sorting is slowing, “it’s unclear when it will end and the post-sorting growth algorithm for sweep balances.” The analyst also lowered his third-quarter earnings forecast to $1.26 per share from $1.51 per share. In contrast, a FactSet consensus estimate indicates analysts on average expect the company to report a profit of $1.31 per share. Hawken also cut his full-year earnings forecasts for 2023, 2024 and 2025. Morgan Stanley is slated to report third-quarter results Oct. 18. The stock has slipped nearly 6% this year. MS YTD mountain MS YTD stock chart — CNBC’s Michael Bloom contributed to this report.
