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Analyst Actions: Morgan Stanley, Oracle

September 22, 2008

GOLDMAN REITERATES CONVICTION BUY LIST ON MORGAN STANLEY

Goldman Sachs analyst William Tanona says although some of the recent price decline in Morgan Stanley (MS) stock has been understandable given issues at Lehman Brothers (LEH), Merrill Lynch (MER) and AIG (AIG), and he believes most of the downward spiral was exaggerated by short sellers.

With the SEC and FSA implementing new short sale rules, enhanced liquidity facilities by Fed and a consortium of global banks, and indications that the government may establish funds, Morgan Stanley should be well positioned to capitalize on future opportunities. He believes Morgan Stanley is sound as an ongoing entity.

Tanona sees significant opportunities for Morgan Stanley to outperform over next 6-12 months. He keeps $44 six-month price target.

PIPER JAFFRAY UPGRADES ORACLE TO BUY FROM NEUTRAL

Piper Jaffray analyst Mark Murphy says Oracle’s (ORCL) $5.4B pro forma [PF] revenue and $0.29 PF EPS compares to $5.4 billion and $0.27 consensus. He notes $5.85-6.01 billion total second quarter PF revenue guidance, PF EPS of $0.35-$0.36 compared to consensus of $6.23 billion and $0.35.

While Oracle only reported full-year EPS decline one time in the last 10 years, Murphy thinks Oracle’s EPS resiliency has improved, as recurring maintenance revenue comprises 50% of revenue vs. 37% in fiscal year 2002 [May], and Oracle is advantaged by greater economies of scale today. He notes ORCL shares trade at 12 times his $1.59 calendar year 2009 EPS forecast, the lowest multiple in many years, including the last recession in 2002.

He rrims EPS estimates from $1.54 for fiscal year 2009 to $1.51 and $1.76 for fiscal year 2010 to $1.72. He sets $23 price target.




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