MS stock was trading at $88.91 as of 10:51 AM EDT.

John Heagerty, an analyst with Atlantic Equities, downgraded the stock of both Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS) due to decreased investment banking activity, dropping equity markets, and worries that trade expectations are still overly optimistic. Furthermore, he sees few near-term encouraging triggers to counteract the elevated risk.

Goldman ((NYSE:GS) was demoted to Underweight from Neutral, while Morgan Stanley (NYSE:MS) was dropped from Overweight to Neutral. The analyst said that banks normally underperform the market by about 30% in the early stages of a recession and then do better by about that same percentage as the yield curve steepens.

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Heagerty compared the current scenario to a blend of the early 1990s and early 2000s recessions, which would create a situation in which banks might absorb credit defaults and outperform in a relative sense while highly valued stocks de-rate.

On Bank of America, Wells Fargo, and the First Republic, he maintains an Overweight rating (FRC). Both Goldman ((NYSE:GS) and Morgan Stanley (NYSE:MS) have Hold ratings from SA Quant. Cavenagh Research, a SA contributor, likes that Goldman ((NYSE:GS) has responded quickly to the gloomy economic picture, while Pearl Gray Equity and Research is worried about the firm’s trading income mix.

MS Stock Forecast

Understanding the ownership structure of the company will help you determine who is really in charge of Morgan Stanley (NYSE:MS). Institutions are the group that owns the majority of the company’s shares, or roughly 63% of them. In other words, the group’s investment in the business has the greatest potential for profit (or loss). Institutional investors would likely be pleased with the US$7.7 billion market cap increase from last week, especially after a year of 13% losses.

Investors should be aware that because institutions own more than half the corporation, they have a lot of influence overall. Hedge funds do not own Morgan Stanley. With 22% of the outstanding shares, according to our data, Mitsubishi UFJ Financial Group, Inc. is the largest stakeholder. State Street Global Advisors, Inc. and The Vanguard Group, Inc. are the second and third largest shareholders, holding 7.1% and 6.9% of the outstanding shares, respectively.

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