Morgan Stanley’s stock surged 1.7% in premarket trade Wednesday, after the investment bank was upgraded at RBC Capital Markets, which was upbeat on the growth outlook for the wealth management business. Analyst Fiona Swaffield raised her rating to outperform from sector perform, while keeping her stock price target at $39, which is 21% above Tuesday’s closing price of $32.36. “We expect wealth management to remain a source of EPS growth driven by the deposit deployment strategy independent of the timing of U.S. rate rises,” Swaffield wrote in a note to clients. She said she believes Morgan Stanley will benefit from any rise in interest rates, saying a one percentage-point increase could add 7% to annual profit. The stock has slumped 16% over the past three months, while the SPDR Financial ETF has lost 6.2% and the S&P 500 has slipped 4.9%.
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