Here are Morgan Stanley's top stock ideas for the next year

Published Thu, Jul 13 20172:36 PM EDT

Morgan Stanley released its top picks to hold over the next 12 months in its eighth annual "Vintage Values 2018" list, compiled by the firm's research analysts. "We focused on stocks rated Overweight by our analysts that also were favoured by our US Equity Strategy Team's 'BEST' model," the Morgan Stanley analysts wrote in Thursday's note. "Our US Equity Strategist team's work has shown that when our industry analysts' fundamental rating on a stock and the Strategy team's quantitative equity selection tool agree, performance has typically been superior than by using either method separately." Here are a few of the firm's top choices. 1) Cisco Systems ( CSCO ) Morgan Stanley's 12-month price target for Cisco is $39, representing 25 percent upside from Wednesday's close. Key value drivers include whether Cisco can successfully transition to a software and services oriented business as well as how cloud technology will affect Cisco's traditional enterprise market. The analysts predict "Cisco gains share in IT budgets as security and networking spend converge, favoring the company's end-to-end architecture. Software-defined networking proves to be a growth opportunity as customers more consistently upgrade equipment to implement the latest security technologies. 2) T-Mobile ( TMUS ) The analysts' 12-month price target for T-Mobile is $72, representing 17 percent upside from Wednesday's close. Key value drivers included industry M & A, investments in better coverage, as well as its reputation as the "customer friendly carrier." "T-Mobile has ~14% market share among the Big 4 wireless carriers and has taken almost 100% of the industry's postpaid phone growth over the last year. In our view, there is an opportunity to continue to take market share, from the expansion of LTE …, iPhone penetration, and business customers." 3) Viacom ( VIAB ) Morgan Stanley analysts noted their $48 12-month price target on Viacom, representing 39 percent upside from Wednesday's close. Potential catalysts included ratings improvement driving domestic advertising, further monetization of library content through online distribution arrangements, and participation in industry consolidation. "We remain confident in the new management's strategic plan and that Viacom's assets and earnings profile are undervalued." "We continue to view Paramount as a scarce, valuable asset that would generate significant strategic interest." 4) WESCO International ( WCC ) Morgan Stanley researchers' price target for WESCO is $74, representing 34 percent upside from Wednesday's close. Potential catalysts included tangible progress on infrastructure stimulus and tax reform in the U.S. and share repurchases given strong cash generation. "With its largest Industrial segment, now standing ~20% below the 2014 peak, the company is expected to see strong cyclical tailwinds as domestic manufacturing activity continues to improve, visible in the Oil & Gas market. A potential uptick in project activity will also lead to recovery in the company's capex-oriented businesses." — CNBC's Michael Bloom contributed to this report.

John Legere

Mark Neuling | CNBC

Morgan Stanley released its top picks to hold over the next 12 months in its eighth annual "Vintage Values 2018" list, compiled by the firm's research analysts.

"We focused on stocks rated Overweight by our analysts that also were favoured by our US Equity Strategy Team's 'BEST' model," the Morgan Stanley analysts wrote in Thursday's note.

"Our US Equity Strategist team's work has shown that when our industry analysts' fundamental rating on a stock and the Strategy team's quantitative equity selection tool agree, performance has typically been superior than by using either method separately."

Here are a few of the firm's top choices.