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April 06, 2007

Morgan Stanley - Buy It

Company: Morgan Stanley
Ticker: MS
Exchange: NYSE
Industry: Investment Brokerage – National

Pros:

* PE of 9.69
* PEG 0.77
* Operating margin 37.56%
* Strong earnings growth

Cons:

* Sub-prime Concerns

* Hard numbers to beat going forward

Analysis:

Okay, when everyone talks about investment banks, let’s be honest, they always say Goldman first. They are a great company, a fantastic company in fact. However, a massive portion of their profits comes from prop trading operations. Morgan Stanley performs equally well, and even outpaces Goldman on some league tables across the Investment Banking arena. Additionally, Morgan Stanley recently replaced their CEO with John Mack, a former executive that was previously forced out but returned to the company. Since then the firm has performed exceptionally well. Recently Morgan Stanley launched its “World Wise” ad campaign, which is a vast departure from the way the firm previously portrayed itself. This is just another step in the turn around. Right now is a great buying time, too. They are well under their high for the year. MS is trading with the lower PE than Goldman and it has a much lower amount of risk due to the fact that its revenues are not so dependent on prop trading. One of these days, GS is going to get crushed on their trading, and MS will be the one there to pick up the pieces.


Posted by jkill at April 6, 2007 01:20 AM

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