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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: LTK007 who wrote (41598)	3/18/2002 3:08:19 PM
From: LTK007	Respond to of 99280

Morgan Stanley Gives 22% of Stocks Low Rating: Call of the Day By Philip Boroff 03/18 14:39 quote.bloomberg.com New York, March 18 (Bloomberg) -- Morgan Stanley Dean Witter & Co.'s analysts gave one of every five stocks they cover the lowest rating in a new system introduced today -- amounting to more negative calls than all their competitors combined. Morgan Stanley analysts ranked 191 stocks, 22 percent of the companies they cover, ``underweight.'' The largest securities firm by market value assigns that designation to stocks its analysts say have the worst prospects over 12 to 18 months. Its six largest competitors deem just 66 stocks ``sell'' or the equivalent, according to Thomson Financial/First Call. ``Honesty is returning to the marketplace,'' said Richard Eakle, a Shrewsbury, New Jersey-based money manager and a Morgan Stanley market strategist from 1984 to 1988. ``This is overdue.'' Since stocks collapsed in 2000, securities firms have come under pressure to reform their stock ratings. Investors, regulators and lawmakers have charged that Wall Street analysts steered clear of ``sell'' recommendations -- and promoted stocks -- to avoid alienating investment-banking clients. Securities firms faced more scrutiny after Enron Corp.'s bankruptcy. Analysts at four Morgan Stanley competitors were called to testify in Washington about why they maintained ``buy'' recommendations on the company, even as its finances imploded. Before overhauling its rating system, Morgan Stanley rated fewer than 10 stocks, about 1 percent of the companies covered, ``underperform,'' the lowest rating until today. Analysts had used four ratings. That's now down to three. ``Overweight'' The analysts rated 33 percent of the stocks ``overweight'' today and 45 percent ``equal-weight'' as part of its new rankings. A stock rated ``overweight'' is expected to return more over the next 12 to 18 months than all stocks in that industry. One rated ``equal-weight'' is expected to be in line with others in the industry. Last month, the National Association of Securities Dealers proposed standards that would require brokerage firms to say how many of the stocks it rates are in ``buy,'' ``hold'' and ``sell'' categories even if they didn't use such a rating system. ``This is the first of the ducks to fall in line with what's coming from the NASD,'' said Chuck Hill, director of research at First Call. ``They're smart to be in sync with what's going to be required.'' Among the companies Morgan Stanley rated ``underweight'' are Charles Schwab Corp., Stilwell Financial Inc., Adolph Coors Co., Eli Lilly & Co., Amerada Hess Corp., Ask Jeeves Inc., Cablevision Systems Corp., Nordstrom Inc., and Toys R Us Inc. Morgan Stanley contacted executives at all 884 companies it covers to disclose each company's new rating. Some have been investment-banking clients, company officials said. Seeking Integrity ``Of course we're concerned with what our clients have to say'' about the rankings, said Dennis Shea, Morgan Stanley's global equity research director. ``But we know they want us to have a system with integrity.'' Shea said the firm rejected ``buy'' and ``sell'' ratings because they aren't appropriate for a range of investors with different time horizons. Morgan Stanley's analysts also published a view on each industry, rating them ``attractive,'' ``in line'' with a broad market benchmark or ``cautious.''