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Dick Bove Bullish On Cash-Rich Morgan Stanley

Between the stock market’s assessment of Morgan Stanley and Moody’s possible downgrade, the smart money is listening to the former, noted bank analyst Dick Bove said Thursday.

Now his top pick among financials, Morgan Stanley is facing a downgrade — although by how many notches remains to be seen — but Bove isn’t worried.

“I think Moody’s is a lagging indicator here,” he said on CNBC’s “Fast Money.”

One of the catalysts for the bank, whose stock closed down 1.6 percent at $18.38, it its impending acquisition of the remainder of Smith Barney.

The merger would benefit Morgan Stanley, which has about $70 billion in cash, Bove said.

“I can’t see them paying more than $10 billion for Smith Barney,” he said. “I don’t think it’ll create any stress on their balance sheet.”

(At the beginning of the interview, Bove provided a quiz question: Who gets paid more — The New York Yankees infield, or the CEOs of the four larger banks. See related video for the answer.)

The Rochdale Securities analyst also said he was a “big believer” in the Bank of America story.

“I really believe that this company has $2.75 to $3 in earnings inside it,” he said, with the possibility that the stock could trade in the high $20s to low $30s within the next couple of years, even though it might dip on profit-taking in the meantime.

The stock closed at $9.23 per share, up 0.3 percent.

“I would be a buyer, aggressively, all through the summer,” he said.



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Trader disclosure: On April 5, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Brian Kelly is long USG; Brian Kelly is long SPY; Brian Kelly is long USD; Brian Kelly is long KRE; Brian Kelly is long IWM; Brian Kelly is short HYG; Karen Finerman is long AAPL; Karen Finerman is long BAC; Karen Finerman is long JPM; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long HPQ; Karen Finerman is long SPY; Karen Finerman is long IWM; Karen Finerman is long MDX; Karen Finerman is short SPY; Dan Nathan is long AAPL JAN 450 PUTS; Dan Nathan is long BAC LONG MAY 7 PUTS; Dan Nathan is long LONG APRIL XLF 15 PUTS; Dan Nathan is long LONG APR 16 CALLS YHOO; Dan Nathan is long LONG APR 200 PUTS IBM; Dan Nathan is long WMT LONG APR 60/57.5 PUT SPRD; Dan Nathan is long RIMM JAN 20/27.5 CALL SPREAD; Josh Brown is long AAPL; Josh Brown is long JPM; Josh Brown is long WFC; Josh Brown is long GDX; Josh Brown is long GLD; Josh Brown is long XLU; Josh Brown is long XLF; Josh Brown is long IBM; Josh Brown is long COP; Brian Stutland is long SPY; Brian Stutland is long XLF; Whitney Tilson is long C; Whitney Tilson is long WFC; Whitney Tilson is long GS; Whitney Tilson is long JPM; Whitney Tilson is long AIG

For Kimberly Greenberger
Within the last 12 months, Morgan Stanley managed or co-managed a public offering (or 144A offering) of securities of Kohl's, Nordstrom.

Within the last 12 months, Morgan Stanley has received compensation for investment banking services from Costco Wholesale Corp., Gap Inc, J.C. Penney Co., Kohl's, Limited Brands Inc, Macy's Inc., Nordstrom, Saks Inc., Target Corp..

In the next 3 months, Morgan Stanley expects to receive or intends to seek compensation for investment banking services from Costco Wholesale Corp., Gap Inc, J.C. Penney Co., Kohl's, Nordstrom, Ross Stores Inc., Saks Inc..

Within the last 12 months, Morgan Stanley has received compensation for products and services other than investment banking services from J.C. Penney Co., Kohl's, Macy's Inc., Nordstrom, Saks Inc..

Within the last 12 months, Morgan Stanley has provided or is providing investment banking services to, or has an investment banking client relationship with, the following company: Costco Wholesale Corp., Gap Inc, J.C. Penney Co., Kohl's, Limited Brands Inc, Macy's Inc., Nordstrom, Ross Stores Inc., Saks Inc., Target Corp..

Within the last 12 months, Morgan Stanley has either provided or is providing non-investment banking, securities-related services to and/or in the past has entered into an agreement to provide services or has a client relationship with the following company: J.C. Penney Co., Kohl's, Macy's Inc., Nordstrom, Saks Inc., TJX Companies Inc..

Morgan Stanley & Co. LLC makes a market in the securities of Costco Wholesale Corp., Gap Inc, J.C. Penney Co., Kohl's, Limited Brands Inc, Macy's Inc., Nordstrom, Ross Stores Inc., Saks Inc., Target Corp., TJX Companies Inc.

For Michelle Meyer
No disclosures

For Dick Bove
No disclosures

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