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Morgan Stanley downgrades NCR stock

Yahoo Finance Live’s Brad Smith discusses Morgan Stanley downgrading NCR from Overweight to Equal Weight.

Video Transcript

[AUDIO LOGO]

BRAD SMITH: Let's talk about NCR, too. I've been tracking this one here on the day, as this one has recently begun moving even lower by about 3 and 1/2%. We've been tracking this one since before the bell. Morgan Stanley downgraded it to equal weight from overweight, and reduced the price target to $27 from $38, citing the company's plans to split itself in two.

They're taking this route instead of selling themselves. And that's what is getting some cold water tossed on it from the executive chairman in what they said in the release. Throughout the strategic review process, they reviewed material interest and a whole company sale of NCR and also various individual segments of their business.

And so it became clear to them in the current financing markets that they can't deliver an entire company in a transaction. So at the end of the day, the decision to split, we'll see if that actually makes it a little bit more appetizing for the parts of their business that they feel comfortable selling off or have received some nibbles for a deal.

JULIE HYMAN: Yeah, well, this Morgan Stanley analyst doesn't think they're gonna-- that that's gonna be the outcome, right? He says he looked at past spinoffs and saw little to no outperformance during the period from a spinoff announcement to the actual separation date. Beyond that, I don't know. But during this period, as they're trying to figure out the mechanics of everything, the stocks don't tend to do well.

BRAD SMITH: Yeah, that's the review right there. Everyone, we'll continue to track shares of both of those companies.