UPDATE: Morgan Stanley Initiates Waddell & Reed Financial at Equal-Weight on Flow Headwinds

Morgan Stanley initiated coverage on Waddell & Reed Financial

with an Equal-weight rating and a $35 price target. Morgan Stanley noted, "[W]e see significant organic growth opportunities driven by expansion of WDR's strong-performing product platform and by increased penetration of the Wholesale & Institutional channels. However, we see equally significant challenges in elevated outflows from Waddell's Asset Strategy funds (30% of AuM) driven by performance volatility, and potential pressure on margins associated with growth in the Wholesale channel." Waddell & Reed Financial closed at $33.06 on Thursday.