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Morgan Stanley: Financial Loser

Tickers in this article: MS

NEW YORK (TheStreet) -- Morgan Stanley (MS) was the loser among the largest U.S. financial names on Wednesday, with pulling back 3% to close at $16.95.

The broad indexes were mixed, after ADP reported that private-sector U.S. employment increased by 119,000 during April, on a seasonally adjusted basis, declining sharply from a revised 201,000 during February.

Economists surveyed by Thomson Reuters had estimated that private-sector payrolls would grow by 170,000 during April.

The KBW Bank Index (I:BKX) decline 1% to close at 48.44, with 17 out of 24 index components seeing declines.

Morgan Stanley's shares have now returned 13% year-to-date, following a 44% decline during 2011.

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The shares trade for a low 0.6 times their reported March 31 tangible book value of $27.37, and for seven times the consensus 2013 earnings estimate of $2.42, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $1.43.

Wells Fargo analyst Matthew Burnell rates Morgan Stanley "Market Perform," and said on April 20 following the company's first-quarter earnings announcement, that excluding debit valuation adjustments and employee severance costs, Morgan Stanley generated a first-quarter return on tangible common equity of 11%, "below Goldman Sachs (14%) and JPMorgan Chase's IB unit," which had an ROE of 17%.

Burnell added that "Q1 results finally pierced double digits, but sustainability remains the question," and that because he believes "MS will be challenged to earn its cost of equity in 2012, MS shares are unlikely to trade meaningfully above TBV in the near term."

Interested in more on Morgan Stanley? See TheStreet Ratings' report card for this stock.

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-- Written by Philip van Doorn in Jupiter, Fla.

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