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The Zacks Analyst Blog Highlights: Morgan Stanley, Mack-Cali Realty, Prudential Financial, Federal Realty Investment and Simon Property Group

Zacks Equity Research

For Immediate Release

Chicago, IL – April 10, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Morgan Stanley (MS), Mack-Cali Realty Corp. (CLI), Prudential Financial Inc. (PRU), Federal Realty Investment Trust (FRT) and Simon Property Group Inc. (SPG).

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Here are highlights from Tuesday’s Analyst Blog:

Morgan Stanley Upped to Outperform


On Apr 5, 2013, we upgraded our long-term recommendation on Morgan Stanley (MS) to Outperform from Neutral. The upgradation was based on the Federal Reserve’s approval of its 2013 capital plan.

Why the Upgrade?

In Mar 2013, Morgan Stanley received approval from the Fed to go ahead with its plan to acquire the remaining 35% stake in Morgan Stanley Wealth Management (MSWM). Also, approval of its latest capital plan reinforces the belief that the company’s capital position remains stable.

Morgan Stanley is expected to announce its first quarter 2013 results on Apr 18. The Zacks Consensus Estimate for the quarter is pegged at 58 cents per share. The Zacks Earnings ESP (Read: Zacks Earnings ESP: A Better Method) for Morgan Stanley is 0.00% for the first quarter. This, along with its Zacks Rank #3 (Hold), lowers the chance of a positive earnings surprise.

Over the past 60 days, the Zacks Consensus Estimate for 2013 inched up 1.4% to $2.10 per share. Likewise, the Zacks Consensus Estimate for 2014 advanced 3.2% to $2.56 over the same period.

Additionally, Morgan Stanley has been lowering its fixed income and commodities risk-weighted assets (RWAs) since 2009. The company continues to restructure its fixed income businesses by doing away with complex structured product businesses. We anticipate reduced RWAs to free-up capital that could be utilized for enhancing shareholders’ value.

Mack-Cali Closes Alterra IB Deal

Mack-Cali Realty Corp. (CLI) acquired a luxury multi-family property – Alterra at Overlook Ridge IB – in Metro Boston. The company shelled out around $88 million for this acquisition. Notably, the purchase was pursuant to a deal penned by the company that the latter disclosed in January at the time of the ‘Alterra at Overlook Ridge IA’ acquisition.

Alterra IB adds 412 rental units to Mack-Cali’s portfolio. The property is currently 96.1% leased and is situated in the master planned community of Overlook Ridge in Revere and Malden, Mass.

Mack-Cali acquired both Alterra IA and Alterra IB from a joint venture of Prudential Insurance Company of America, an operational arm of Prudential Financial Inc. (PRU). The acquisitions are in line with the company’s strategy of expanding its portfolio and owning premium quality properties in upscale markets.

Together, Alterra IA and Alterra IB brings on board 722-units for a purchase price of $149.3 million. The properties offer locational advantage for their connectivity to major roadways and for its proximity to north of downtown Boston.

As a matter of fact, Alterra IB at Overlook Ridge is developed and managed by Mack-Cali's recently acquired Roseland subsidiary. In Oct 2012, Mack-Cali acquired Roseland Property – one of the largest residential developers in the northeast. Since then, Roseland Property is operating as a subsidiary of Mack-Cali.

We expect the acquired properties to complement the company’s other upscale property in the Massachusetts area – Quarrystone at Overlook Ridge. Also, the transaction will likely be accretive to the company’s earnings in the upcoming quarters.

Mack-Cali currently has a Zacks Rank #2 (Buy). Other REITs that are performing well and are worth a look include Federal Realty Investment Trust (FRT) and Simon Property Group Inc. (SPG), both carrying a Zacks Rank #2.


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Read the analyst report on MS

Read the analyst report on CLI

Read the analyst report on PRU

Read the analyst report on FRT

Read the analyst report on SPG

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