Bernstein Research Is (Still) Bullish on Morgan Stanley

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Brad Hintz, a senior analyst at Bernstein Research and a former CFO of Lehman Bros., still has an outperform on Morgan Stanley, and seems to be scratching his head that MS shares are trading below tangible book value. Sure, MS has been posting inconsistent results, but, concludes Hintz: Q1 results are "a step in the right direction." And what of the Global Wealth Management unit? The Smith Barney acquisition, in his view, remains "on track." And the brokerage unit remains "an enormous work in progress."

"Global Wealth Management revenue was up modestly, driven by higher asset balances, partially offset by weak equity underwriting commissions during the quarter," Hintz writes in today's research note. He also adds, "We have explained to clients that mark-to-market balance sheets should never trade below tangible book."

The bottom line: "MS is a globally positioned institutional investment banks [sic] and trading house that is in the process of building out the leading wirehouse in North America. As MSSB performance improves and retail earnings exapend, the earnings volatility of the consolidated firm will decline while the capital intensity of its revenue base will fall. We rate Morgan Stanley Outperform."

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