Morgan Stanley Down 34% From 2020 Peak, 10% Gain Possible Post-Covid?

by Trefis Team
-2.50%
Downside
47.79
Market
46.60
Trefis
MS
Morgan Stanley
Rate   |   votes   |   Share

Morgan Stanley’s stock (NYSE: MS) has rallied 39% over recent weeks (vs. about 28% gain in the S&P 500) to its current level of $37 after falling to a low of $28 in late March as a rapid increase in the number COVID-19 cases outside China resulted in heightened fears of an imminent global economic downturn. But the stock remains 34% below the $56 peak it reached in mid-February, and we believe it can recover to the $41 level (10% upside potential) once fears surrounding the coronavirus are put to rest. Our conclusion is based on our detailed comparison of Morgan Stanley’s stock performance during the current crisis with that during the 2008 recession in an interactive dashboard analysis.

How Did Morgan Stanley Stock Fare During The 2008 Downturn And What Does It Mean For The Stock This Time Around?

We see MS stock declined from levels of around $51 in October 2007 (the pre-crisis peak) to roughly $16 in March 2009 (as the markets bottomed out) – implying that the stock lost as much as 68% of its value from its approximate pre-crisis peak. This marked a sharper drop than the broader S&P, which fell by about 51%.

However, MS partially recovered post the 2008 crisis to about $25 in early 2010 – rising by 52% between March 2009 and January 2010. On the other hand, the S&P bounced back by about 48% over the same period. In comparison, MS stock lost 51% of its value between the market peak on February 19 to the low on March 23, and has already recovered 39% since then. Keeping in mind the trajectory over 2009-10, this suggests a potential recovery to around $41 (10% upside) once economic conditions begin to show signs of improving. This marks a partial recovery to the $56 level MS stock was at before the coronavirus outbreak gained global momentum.

But When Can We Expect This Recovery In Morgan Stanley Stock?

The rally across industries over recent weeks can primarily be attributed to the Fed stimulus which put investor concerns about the near-term survival of companies to rest. The gradual lifting of lockdowns globally has also helped the demand for some non-essential goods recover. Over the coming weeks, we expect continued improvement in demand and subdued growth in the number of new COVID-19 cases in the U.S. to buoy market expectations. While Q2 results will be weak, investors will focus their attention on 2020 results – helping Morgan Stanley stock trend higher over the latter half of the year. Additionally, more information about Morgan Stanley’s revenue forecasts for 2020 and 2021 is available in our interactive dashboard.

While Morgan Stanley has limited upside, on the flip side, we found a lot of strength in JPMorgan’s stock. We compare the performance of JPMorgan vs Wells Fargo stocks to understand it better.

 

See all Trefis Price Estimates and Download Trefis Data here

What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product, R&D, and Marketing Teams

Rate   |   votes   |   Share

Comments

Name (Required)
Email (Required, but never displayed)
Be the first to comment!