Morgan Stanley Likes Bank Of America, Citigroup In Large Cap Space And Visa In Payments

A group of analysts at Morgan Stanley released their top investment ideas in financials post third quarter earnings.

The analysts like owning shares of Bank of America Corp BAC and Citigroup Inc C within the large-cap space while Visa Inc V is preferred in payments.

Bank of America: Expect EPS growth

Bank of America is liked by the analysts as the company has shown it can drive down expenses even further and can reduce its legacy asset servicing costs by an additional $850 million a quarter.

The analysts expect the bank to show improved earnings per share stemming from not only continued expense cuts but an improving macro environment, market share gains and accelerating capital returns.

The analysts also note that Bank of America is more positively skewed towards rising rates than its peers.

Shares are Overweight rated with a $21 price target.

Citigroup: Accelerated Capital Return

The analysts expect an accelerated return of capital in 2015 as the bank continues to execute on its expense management program. The bank will also be able to return capital to shareholders as it improves its core operations, exists higher risk-weight assets while exiting consumer businesses operations in non-strategic international markets.

Shares are Overweight rated with a $63 price target.

Visa: 2015 Guidance Conservative

The analysts believe that Visa's fiscal 2015 guidance of low double-digit constant currency revenue growth could prove to be conservative if underlying payment metrics hold steady at current levels.

Cross border volume improved to 10 percent year-over-year after weakness over the past few quarters, according to the analysts. In addition, foreign exchange volatility showed signs of recovery after reaching 15-year lows earlier in 2014.

Shares are Overweight rated with a $270 price target.