UBS Warburg initiated coverage on Morgan Stanley Dean Witter (MWD ), Lehman Brothers (LEH ), Goldman Sachs (GS ) and Merrill Lynch (MER ) with buy.
Analyst Diane Glossman says although her base case for investment banks is relatively cautious, she expects a moderate rebound in high margin products and volumes in the second half. She thinks continued sluggishness of deal calendars and economic concerns will temper first-half revenue expectations, however, she believes this is already reflected in current valuations.
Glossman says valuations are at the low to middle end of the historical range, although franchises probably are in their best shape yet. She has a $70 target for Morgan Stanley, a $100 target for Goldman Sachs, an $80 for Lehman Brother and a $65 target for Merrill Lynch.