Morgan Stanley, the best-performing stock among the largest Wall Street banks since the end of 2012, will rise at a slower pace over the next year as the current price anticipates the firm reaching its profitability goal, said David Konrad, a Macquarie Group analyst.
Bloomberg News reports that Morgan Stanley dropped 1.9%, the most in a month, to $34.04 as Konrad cut his rating to neutral from a buy recommendation he’d held since beginning his coverage in June 2013. The shares have more than doubled in the past two years, and climbed 11% this year through yesterday, more than any of its four biggest U.S. investment bank rivals.
CEO James Gorman has achieved success with his strategy of relying more on wealth and asset management and reducing the size of the firm’s fixed-income, currency and commodities trading business, Konrad wrote. Still, the company may be limited in its ability to return capital in dividends and buybacks because of the need for regulatory approval and a leverage ratio that lags behind peers, he said.
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