Citi upgraded Morgan Stanley (NYSE:MS) to buy on Friday and said if the Fed cuts rates as expected, that it will "spur capital markets activity."
The firm also said it expects two rate cuts in 2019 and 2020 and raised its target price on the investment bank to $52 from $48.
Citi analyst Keith Horowitz said, "We see Morgan Stanley net income growth of 2-3% over the next two years by continuing to gain market share in both its institutional and retail franchises, which compares more favorably against the flat to slightly declining net income growth among the rest of the bank universe."
MS was in the news this week when it announced that its investment arm had entered into a definitive agreement to sell its interest in DocuWare GmbH, a leading global provider of content services software, to Ricoh.
DocuWare represented a unique opportunity for the Expansion Capital division to partner with the Co-Founders and executive team of a best-in-class content services software provider as the company’s first and only private equity investor in order to accelerate growth and ultimately more than triple the business scale.
Shares of Morgan Stanley are up 40 cents to $44.58, in early Friday trading. The firm will report its second quarter earnings on July 18. The shares have underperformed the market the last three months, down 5% on concern lower rates will hurt profits for banks.
