Shares of investment bank Morgan Stanley advanced Monday with the broader market as analysts upgraded the stock, saying 2010 should bring continued profitability and share price growth.
Analysts from Credit Suisse and UBS Securities noted the potential for Morgan Stanley to excel as it regains lost business, adds staff and starts the year with new top management. Co-president James Gorman took over as CEO Monday as John Mack stepped down but remains chairman.
Credit Suisse analyst Howard Chen moved Morgan Stanley to "Outperform" from "Neutral" saying its outlook for 2010 looks positive as the company restores some of its lost market share and as key customers return.
Shares rose $1.39, or 4.8 percent to $30.99 in afternoon trading.
Morgan Stanley also is about halfway through hiring an additional 400 employees in its institutional securities division, which will translate into additional revenue this year, mostly in the last half of the year, Chen said.
Chen updated 2009 earnings estimates to a loss of $1.08 from the previous loss of 59 cents. Analysts surveyed by Thomson Reuters expect a loss of 67 cents per share.
For 2010, the estimate was boosted to $3.20 per share from the previous $3.10. Analysts expect $3.30.
He initiated expectations for 2011 at $3.60. Analysts expect $3.66.
UBS Securities analyst Glenn Schorr also upgraded Morgan Stanley shares to "Buy" from "Neutral." He sees the company's capital and liquidity as strong and its investment business growing this year.
Schorr said the company is a work in progress with new top management taking over.
In addition, the integration of the retail brokerage Smith Barney is on track and going well, Schorr said.
Morgan Stanley operated Smith Barney as a joint venture with Citigroup Inc., but the companies announced in September that Morgan Stanley, which owned 51 percent of the brokerage, would acquire the remaining portion.