(Adds Oppenheimer, JP Morgan comments; updates share movement)
By Sweta Singh
BANGALORE, Sept 17 (Reuters) - Several analysts raised their 2008 profit forecast on Morgan Stanley (MS.N), after the No. 2 U.S. investment bank’s better-than-expected quarterly results brought some relief to a rattled Wall Street, but voiced concerns that macroeconomic factors could weigh on fourth-quarter earnings.
Wachovia, which termed Morgan Stanley’s capital position as “good,” said, “Conditions remain challenging, but Morgan Stanley is an endgame winner in the industry.” The brokerage reiterated its “outperform” rating on the stock.
William Tanona of Goldman Sachs sees significant opportunities for the company to gain market share as a result of uncertainty surrounding rivals. He said Morgan Stanley was the most attractive name in his large-size brokerage universe.
Prominent banking analyst Meredith Whitney considers valuations for Morgan Stanley “attractive” and believes the company’s shares are fairly priced at current levels.
But J.P. Morgan analyst Kenneth Worthington continues to favor Goldman Sachs (GS.N) for long-term investors although he believes Morgan Stanley could outperform in the near-term.
Analysts’ 2008 earnings-per-share estimates for Morgan Stanley’s range between $4.40 and $5.02. Fourth-quarter earnings estimates range between 69 cents a share and $1.04 a share.
On Tuesday Morgan Stanley and rival Goldman Sachs reported a fall in third-quarter profit, but beat analysts’ expectations, even as markets continue to be hit by the worst slump in decades.
The results came a day after investment bank Lehman Brothers Holdings Inc LEH.N filed for bankruptcy and No. 3 broker Merrill Lynch & Co Inc MER.N agreed to be bought by Bank of America Corp (BAC.N) to avoid a similar fate. Shares of Morgan Stanley fell 44 percent to $16.06 Wednesday morning on the New York Stock Exchange. Most financial stocks were taking a hit as the government’s rescue of AIG (AIG.N) did little to calm investor nerves.
The Dow Jones Industrial Average .DJI was down more than 380 points at 10678.46, while the S&P 500 Index .SPX was down almost 4 percent at 1165.62. (Editing by Himani Sarkar, Pratish Narayanan)