In Monday’s issue of Barron’s, my colleague Avi Salzman touted Morgan Stanley’s shares–and their possible total return of 25% or more–thanks to its thriving wealth-management unit. UBS added some more detail to that argument in a note Morgan Stanley’s presentation at a conference yesterday.
AFP/Getty Images UBS analysts Brennan Hawken and David Eads explain:
Competition for talent among WM firms seems to be declining. Mr. Gorman…highlighted "significantly" lower attrition in the WM business, driven by industry wide decreased competition for talent. This supports the findings in our recent FA survey with roughly a quarter of FAs indicating recruiting was slowing down, vs only 16% in our last survey. We expect this reduced competition, plus the pending FINRA rule requiring brokers disclose comp packages to clients before soliciting them to join their new firm could reduce broker mobility.
Shares of Morgan Stanley have dropped 1.2% to $31.68 at 1:11 p.m. today, leaving 20% of upside to Hawken and Eads’ $38 price target.
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