Merrill Lynch raised its near term investment rating on Morgan Stanley Dean Witter (MWD) to buy from accumulate, saying that lower interest rates provide a better climate for financial services stocks. Despite the move, the stock was off 4-3/16 at 84-1/2 amid a general market downturn. Merrill is maintaining its long term buy rating on the stock.
Analyst Judah Kraushaar said that he believes the company is extremely well-positioned to benefit from international investment banking business. He said the strong mergers and acquisitions franchise could see a quick revival.
Kraushaar said the recent earnings per share disappointments and poor investor communication has translated into unusually depressed valuation. He sees progress in establishing best practices in asset management and private client areas.