May 19 (Reuters) - Credit Suisse raised its price target on Morgan Stanley (MS.N) shares, citing asset price firming in fixed income and equities, and signs of broader systemic improvement. “Core business trends have improved, second quarter-to-date-customer flows have accelerated, bid-ask spreads remain healthy, loss ratios are down, the new issue equity pipeline is building, and hedges remain intact or appear to be working,” the brokerage said.
The brokerage, which raised its price target to $28 from $26, also increased its second-quarter earnings estimate for Morgan Stanley to 40 cents a share from 15 cents and lifted its full-year profit view to $1 a share from 95 cents.
After its recent capital raise, Morgan Stanley remains one of the most highly capitalized companies within financial services, Credit Suisse said, adding that the company’s goal remains to repay Troubled Asset Relief Program (TARP) proceeds as soon as possible.
Morgan Stanley had borrowed $10 billion under TARP in October. The company has been raising capital in the past two weeks, selling new shares and notes, after federal regulators announced that it would need to boost capital by $1.8 billion to weather a severe downturn.
Shares of the company, which on Monday said it was selling its remaining stake in MSCI Inc MXB.N — the investment analysis and market index company spun-off from the investment bank in 2007 — were trading up 33 cents at $28.61 Tuesday before the bell. (Reporting by Supantha Mukherjee in Bangalore; Editing by Himani Sarkar)