UPDATE: Morgan Stanley Initiates Underweight, $40 Target on Harman International Industries

Morgan Stanley initiates its coverage on Harman International Industries

with a rating of Underweight and a $40 price target as tech challenges may offset the company's scalable system strategic advantage. Morgan Stanley notes, "Expansion of HAR's scalable platform plus steep uptake of infotainment product should unlock NT earnings upside, though this appears largely priced in at current valuation. In the longer term, competition from smart personal device platforms could constrain future earnings power / multiples." HAR closed at $48.80 a share on Friday.