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Big Upside in Morgan Stanley: Mayo

Wednesday, 15 May 2013 | 1:01 PM ET
Big Upside in Morgan Stanley: Analyst
Wednesday, 15 May 2013 | 12:05 PM ET
A shift within Morgan Stanley has occurred, putting it on track for better growth and returns, CSLA analyst Mike Mayo says.

A shift within Morgan Stanley has occurred, putting it on track for better growth and returns over the next year, CSLA bank analyst Mike Mayo said Wednesday.

"Morgan Stanley is like the Boston Red Sox before they won the World Series," he said. "It's been a really long wait. They have not hit on all cylinders yet, but I think they're on the cusp of doing so."

On CNBC's "Fast Money," Mayo said that he had attended Morgan Stanley's annual shareholder meeting in Purchase, N.Y., where he heard leadership vow to hit return on equity targets "sooner than people expected."

(Read More: Morgan Stanley Shareholders Give CEO Gorman a Pass)

"I can go back to annual meeting next year, the year after, and say, 'You said you'd have double-digit ROEs in 2014.' If it's not there, we can collectively hold their feet to their fire more," he added.

Noting that it had been 16 years since Morgan Stanley's merger with Dean Witter in a massive brokerage integration, Mayo also said that the banking behemoth has smoothed out perceptions of its business.

"What I'm saying is you're going to look back a year from now and say, 'You know that lost credibility? They've recouped a lot of that," he said. "They've cleaned up the balance sheet at Morgan Stanley. They sold off some bad assets.' And there's a lot of disgruntled people out there, used to work at Morgan Stanley; that's yesterday's news. They're past that stage."

Mayo said that the improvement within Morgan Stanley wasn't being reflected in its stock price, at $24.83 per share midday.

"Morgan Stanley is going to narrow the gap vs. the better competitors," he said. "They're going from cleaning up to getting growth and higher returns, and that's what's missed."

Trader disclosure: On May 15, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Jon Najarian is long MSFT; Jon Najarian is short NEM; Jon Najarian is long JNPR; Jon Najarian is long BG; Jon Najarian is long EMC; Jon Najarian is long GTAT; Jon Najarian is long OC; Jon Najarian is short TSLA; Jon Najarian is long ZNGA; Steve Weiss is long AAPL; Steve Weiss is long BAC; Steve Weiss is long C; Steve Weiss is long BBRY; Steve Weiss is long M; Steve Weiss is long BA; Steve Weiss is long AAMRQ; Steve Weiss is long LCC; Steve Weiss is long UAL; Steve Weiss is long THC; Steve Weiss is long BBY; Steve Weiss is long F; Steve Weiss is long SODA; Stephanie Link is long AAPL; Stephanie Link is long GS; Stephanie Link is long JPM; Stephanie Link is long WFC; Stephanie Link is long CSCO; Stephanie Link is long PF; Mike Murphy is long BAC; Mike Murphy is long INTC; Mike Murphy is long FB; Mike Murphy is long F;

For Mike Mayo
Morgan Stanley; The research analyst(s) or his/their household member(s)/associate(s) has/have a financial interest in the securities or related securities of Morgan Stanley; CLSA and/or Credit Agricole Securities (USA) (and/or their respective affiliates) managed or co-managed a public offering of Goldman Sachs's securities in the past 12 months; CLSA and/or Credit Agricole Securities (USA) (and/or their respective affiliates) participated in a public offering of Goldman Sachs's securities or received compensation for investment banking services from Goldman Sachs in the past 12 months; CLSA and/or Credit Agricole Securities (USA) Inc receives or has received compensation from Goldman Sachs for non-investment banking services (eg‚ brokerage services) in the past 12 months; CLSA and/or Credit Agricole Securities (USA) Inc and/or the analysts involved in the preparation of this report have reason to know that an affiliate of Credit Agricole Securities (USA) Inc and/or CLSA received compensation from Goldman Sachs for non-investment banking products/services in the past 12 months; CLSA and/or Credit Agricole Securities (USA) (and/or their respective affiliates) managed or co-managed a public offering of Morgan Stanley's securities in the past 12 months; CLSA and/or Credit Agricole Securities (USA) (and/or their respective affiliates) participated in a public offering of Morgan Stanley's securities or received compensation for investment banking services from Goldman Sachs in the past 12 months; CLSA and/or Credit Agricole Securities (USA) Inc receives or has received compensation from Morgan Stanley for non-investment banking services (eg‚ brokerage services) in the past 12 months; CLSA and/or Credit Agricole Securities (USA) Inc and/or the analysts involved in the preparation of this report have reason to know that an affiliate of Credit Agricole Securities (USA) Inc and/or CLSA received compensation from Morgan Stanley for non-investment banking products/services in the past 12 months; The research analyst(s) or his/their household member(s)/associate(s) has/have a financial interest in the securities or related securities of Morgan Stanley.

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