UPDATE: Morgan Stanley Downgrades Popular on Weakening Puerto Rico Economy

In a report published Thursday, Morgan Stanley analyst Ken A. Zerbe downgraded the rating on

from Equal-Weight to Underweight, and lowered the price target from $32.00 to $25.00. In the report, Morgan Stanley noted, “We are Underweight shares of Popular as we believe a deteriorating Puerto Rican economy could drive provision expense of $303 million, materially higher than consensus is building in. This puts our 2014 EPS estimate 29% below consensus. We believe BPOP will trade at 10x 2015e EPS, or $25.” Popular closed on Wednesday at $29.09.