Good Fundamental Reasons for MS's Stock Price to Behave Better
Looking behind MS's recent better than expected 4Q12 EPS, I believe there are numerous fundamental reasons for investors to take a more positive view of the securities firm's earnings prospects. I refer interested investors to the remarks of the company's CEO and CFO on the firm's investor call. MS's aggressive head count reduction and its efforts to consolidate and streamline its retail brokerage operation should continue to pay dividends during 2013. Moreover, the company continues to take actions to improve its capital efficiency as well as benefits that will accrue from the purchase of the remaining Citicorp's interest in the old Smith Barney. I also believe that the odds favor an improvement in the retail brokerage environment during the current year, which should prove quite beneficial to MS's bottom line. Consequently, my hope is that this firm will be earning its cost-of-capital by year-end, a development that should move its share price much closer to the level of tangible book value.