Nomura Initiates Coverage on Morgan Stanley at Neutral

In a report published Thursday, Nomura analyst Steven Chubak initiated coverage on Morgan Stanley (NYSE: MS) at Neutral, with a $34.00 price target.

According to the report, Nomura is constructive on the long-term earnings outlook, as MS should exceed margin guidance in wealth management and appears on track to achieve $1.6bn of targeted savings.

“MS is the most negatively impacted by the recently-proposed leverage rules, and its weaker position suggests capital return will likely be constrained,” the report noted.

Some highlights from the report included:

-”Normal ROE potential of ~13% and a 2014E capital deficit of $7bn support our $34 TP.” -”Under a risk-based regime, MS would be valued at north of $40 using our capital-adjusted approach.” -FY13E EPS at $1.8. -FY14E EPS at $2.39.

MS closed Wednesday at $31.49.