UPDATE: Morgan Stanley Downgrades Santander Mexico to Equal-Weight on Weaker EPS Outlook

Morgan Stanley downgraded Santander Mexico BSMX from Overweight to Equal-weight and lowered the price target from $18.00 to $16.00. Morgan Stanley noted, "4Q12 results raise questions about BSMX's recurring earnings in 2013-14. Net income was M$3,310 million (M$0.49/share and US$0.19/ADR), 25% below our estimate of M$4,416 million, and 20% below consensus of M$4,153 million. Even excluding non-recurring items, earnings run-rate is significantly below the pre-IPO level. Most notably, higher credit costs will likely continue in 2013-14, pressuring the bottom-line. We are lowering our 2013-14e EPS by 18-19%. We see ROAE at 18-19%, below management guidance of ~20%." Santander Mexico closed at $15.18 on Tuesday.