Read Morgan Stanley's Take On Shifting Spending Patterns Amid Rising Inflation

  • Morgan Stanley analysts Kimberley Greenberger, Pam Kaufman, and John Glass saw initial signs of low-income and increasingly middle-income consumer pressure in the first half of FY22.
  • Now, Morgan Stanley economists have also flagged rising recession risk.
  • They cited that the investors are coming up with several questions, including signs of consumers trading down, the winners and losers of the sectors if the trade down continues, or if a recession were to materialize.
  • Kaufman noted that consumers have turned to private label brands for packaged foods, given the rapidly rising food prices. She adds that in Tobacco, smokers are trading down to discount brands as they face increasing macro pressures.
  • Glass opined that a recession would likely benefit fast food companies as consumers cut down full-service frequency.
  • Greenberger said off-price retailers are the obvious beneficiaries given their deep value position in apparel and home, while mid-priced mall-based retailers are likely to see consumers defect to lower-priced retailers.
  • Some of the ratings by the analysts are given below.
  • The analysts reiterated an Overweight rating on the shares of Coca-Cola Co KO with a price target of $76.
  • They maintained an Overweight rating on the shares of Capri Holdings Ltd CPRI with a price target of $65.
  • The analysts retained an Equal-Weight rating on Colgate-Palmolive Co CL with a price target of $82.
  • They maintained an Equal-Weight rating on the shares of Domino's Pizza Inc DPZ and raised the price target to $426 from $414.
Price Target
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