UPDATE: Citigroup Reiterates Neutral Rating, Raises PT on Morgan Stanley

In a report published Monday, Citigroup reiterated its Neutral rating on Morgan Stanley

, and slightly raised its price target from $19.00 to $20.00. Citigroup noted, “We trim 4Q estimates from $0.30 to $0.27 (vs consensus of $0.33) reflecting a slightly softer revenue environment. (Note our 4Q estimate excludes an estimated -$500 mil/-18c DVA loss from narrower MS credit spreads which is typically also excluded from consensus). Generally, we expect MS to produce somewhat weaker 4Q capital markets performance vs peers primarily due to its greater reliance on commodities trading revenues which we believe have been lackluster this quarter due in part to disruptions from Hurricane Sandy. We anticipate Morgan's 4Q will show q/q core declines of -25% in FICC and -10% in Equities, offset by ~15% increase in Investment Banking fees, given improving volume trends. Cost-wise, we are looking for a 53% 4Q firm-wide comp ratio ex DVA (vs 52% in 3Q). Our estimates imply for FY2012 a -3% y/y core revenue decline vs a -5% drop in comp expense leaving the full year comp ratio ex DVA at 52% (improving vs 57% in 2011).” Morgan Stanley closed on Friday at $18.92.