UPDATE: Morgan Stanley Upgrades Webster Financial to Equal-weight on Relative Valuation Improvement

Morgan Stanley initiated coverage on Webster Financial

with an Equal-weight rating and a $22 price target. Morgan Stanley commented, "Our downgrade of WBS was based on the view that the market was materially overpaying for Webster's strategy of aggressively building out its commercial platform and sharp focus on reducing expenses. The shares' relative valuation gap has narrowed noticeably since the sell-off of the banks began on October 5; they are now trading in line with peers on a P/E basis (12.1x 2013e EPS versus the group at 12.3x) and in line with the regression-implied P/TBV of 1.3x given the bank's expected 11% ROTE in 2013." Webster Financial closed at $20.89 on Tuesday.