Discussion in 'Stocks' started by athlonmank8, Oct 10, 2008.
Race to 0
NCC later today followed by MS on Sunday.
They will merge to form Morgan & Stanleys City Pawnshop. :eek:
Morgan Stanley MS target price $19
October 10, 2008
Morgan Stanley, itself, continues to try and reassure jittery markets. The company said late Thursday in a regulatory filing that it has enough cash to cover all financing for the remainder of the year and will increasingly use its new ability to grow a deposit base if debt markets do not improve as it needs future funding.
Ladenburg Thalmann analyst Richard Bove wrote in a research note that Morgan's share plunge in recent days in reminiscent of what happened to Lehman last month.
"The focus on Morgan Stanley is to change the ending," Bove wrote in the note. "In sum, one must hold one's breath at the moment and hope that this is a different movie."
Part of the plunge in the share price earlier this week was tied to speculation that a $9 billion investment Morgan Stanley is set to receive from Mitsubishi UFJ Financial Group Inc. would not happen.
On Tuesday afternoon, Morgan Stanley affirmed the deal will get done. Mitsubishi did the same on Wednesday. In the regulatory filing Thursday, Morgan Stanley reiterated it expects the deal to close on time.
Last month, Morgan Stanley reached a deal for Mitsubishi to invest $9 billion in equity for a stake in the New York-based investment bank. Mitsubishi would buy $3 billion in common stock at a price of $25.25 per share and acquire an additional $6 billion in convertible preferred stock that carries a dividend of 10 percent and a conversion price of $31.25 per share.
The Federal Reserve Board approved the investment Monday, and the deal is expected to close next week after a mandatory waiting period is completed.
Separately Thursday, Moody's Investors Service said it placed Morgan Stanley's investment-grade long-term senior debt rating on review for a potential downgrade.
Moody's said an expected downturn in global capital markets activity will reduce Morgan Stanley's revenue and profit in 2009 and possibly beyond.
Morgan Stanley will also need to adjust its operations to operate as a bank holding company, which could limit profit opportunities in the future, Moody's said. But, the ratings agency noted that Morgan Stanley's risk profile could also be reduced by the change in structure, which would be a positive change.
Moody's said Morgan Stanley has actively worked to improve its capital base and has maintained strong liquidity. The investment from Mitsubishi is also critical to further improving that capital base, Moody's said.
Like, Moody's Bove expects Morgan Stanley's earnings to be hindered by weakened investment bank in the coming year. Bove reduced his fiscal 2008 earnings estimate by 1 cent to $4.06 per share and cut his 2009 earnings estimate to $2.18 per share from $4.81 per share.
Bove cut his price target on Morgan Stanley to $19 from $44.
Separate names with a comma.