Boston, MA 02/27/2014 (wallstreetpr) – Morgan Stanley (NYSE:MS) it appears has lost ground to analysts following news of a likely settlement with SEC investigators. Analysts UBS have moved the price target for Morgan Stanley lower by over a $1 placing it at $38 per share. The EPS for 2014 too was revised downwards from $2.45 to $2.35. Despite the downgrades, Morgan Stanley continues to be on a bull run, since the last fall in stock prices back on January 17, 2014 when the company presented its earnings report.
The reward to risk ratio has however remained positive. Analysts have assigned $3 downside, while the upside is at $8.
However, the reason for the analysts downgrade was due to the settlement it was likely to reach with investigators.
SEC Investigations
Morgan Stanley (NYSE:MS) has been in the midst of the subprime controversy and has been part of the subprime mortgage bond trades back in 2007. In its latest 10-k filing for the year Morgan Stanley reported that it has concluded preliminary agreement in which to pay $275 million. The agreement is expected to be a preliminary in nature. The allegations currently against Morgan Stanley – that it had indicated otherwise to investors for mortgage bonds during the whole financial crisis.
However, it appears that SEC has not yet placed the accord before the commission or provided any type of assurance that this will stand to be accepted, as of Feb 25.
Morgan Stanley has indicated it has been offering complete co-operation with respect to subpoenas as well as requests the agencies placed before it.
Thus, far Morgan Stanley has been listed for over nine legal issues. The bank has chosen to resolve or settle these since October. It has thus far mooted the settlement option as the best under the circumstances. Again, the litigation costs are expected to be at least three times higher than the estimated $1.95 billion in 2013.
