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2013 Margins ‘A Problem’: Morgan Stanley Analyst

Wednesday, 5 Sep 2012 | 5:25 PM ET

The U.S. equity market is relatively expensive from a price-to-trend-earnings, Morgan Stanley’s Adam Parker said Wednesday on CNBC.

“I’d say it this way: If the revenue estimates are right, the earnings expectations are way too high, so it’s margins for 2013 that are a problem,” the investment bank’s U.S. chief equities strategist said on “Fast Money.”

“On average, about half of the U.S. companies that get net margin expansion year over year, the analysts are currently betting 86 percent of them can do it again next year.”

2013 Margin Levels 'A Problem': Morgan Stanley Analyst
U.S. equity market is relatively expensive from a price-to-trend-earnings, Morgan Stanley Chief U.S. Equity Strategist Adam Parker says.

A market bear, Parker has a year-end price target on the S&P 500 of 1,167.

(Read More: Bears Could Prove Bull Case for S&P 1600: Pro)

Parker said that the effect of factors such as the fiscal cliff and the federal budget challenges might be underestimated, even leaving out the European economic crisis.

“I think if you solve two-thirds of it, you still have very close to no economic growth next year,” he said. “When you analyze economic data points, they still point to lower earnings next year.”

Trader disclosure: On Sept. 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: Stephanie Link is long AAPL; Stephanie Link is long JPM; Stephanie Link is long WFC; Stephanie Link is long VALE; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU; Stephen Weiss is long HK; Stephen Weiss is long QCOM; Stephen Weiss is long MSFT; Stephen Weiss is long VZ; Stephen Weiss is long VOD; Stephen Weiss is long T; Stephen Weiss is long CCNY; Stephen Weiss is long AMATG; Stephen Weiss is short AAPL PUTS; Stephen Weiss is short VALE; Stephen Weiss is short AKS; Dan Nathan is long GS SEPT 90/80 PUT SPREAD; Dan Nathan is long MS JAN 10/5 1X2 PUT SPREAD; Dan Nathan is long INTC SEPT 25/23/21 PUT FLY; Dan Nathan is long CSCO SEPT 17 PUTS; Dan Nathan is long SBUX SEPT 47 PUTS; Dan Nathan is long MSFT OCT 30/28 PUT SPREAD; Dan Nathan is long PG JAN 65/60 PUT SPREAD.

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