Morgan Stanley Initiates Coverage of Huntington Ingalls Industries with Underweight

Morgan Stanley initiated coverage of Huntington Ingalls Industries (NYSE: HII) with an Underweight rating.

In a research report published today, Morgan Stanley states, "We are initiating coverage of No. 1 U.S. Navy shipbuilder HII with an Underweight given the disconnect between a valuation that's a little rich and a margin recovery that's a little long. We project margin recovery in the Gulf Coast will take years, with setbacks, and there are still real risks at NNS, which do not appear to be priced in, in our view. We believe fair value is closer to $30, implying 20%+ downside risk and if we're wrong, upside to the low $40's for a risk/reward that tilts sizably downward."

At the moment, Morgan Stanley has a price target of $32 on Huntington Ingalls' shares. On Tuesday, Huntington Ingalls lost 0.23% of its value to close the day at $38.78.