UPDATE: Macquarie Downgrades Morgan Stanley

Analysts at Macquarie downgraded shares of Morgan Stanley MS to Neutral and reiterated the $37 price target on Friday.

David Konrad stated,” Given the stock currently trades at 1.2x TBV (tangible book value) and a 10% premium to peers on earnings, we are downgrading the shares to Neutral from Outperform.” In addition,”meaningful upside from the mid-$30 range may be more slow to achieve as returns on capital have lagged both strategic initiatives & peer results.”

Analysts highlight three main reasons for the downgrade:

• The company is experiencing a decrease in loan growth. Analysts see loan growth will diminish in 2015 due to the upcoming end of deposit transfer.
• The Fixed Income Clearing Corporation is still and anchor. Morgan Stanley performs below peers when comparing total trading revenue to tradings assets, while fixed income revenue to risk weighted assets has only improved marginally.
• ROTCE (return on tangible common shareholders) continues to lag peers. Morgan Stanley’s ROTCE is roughly 8.6 percent, whereas, its peers are closer to 10 percent.

Shares of Morgan Stanley recently traded at $34.11, down 1.6 percent