CNBC Stock Blog

Goldman, Morgan Stanley Have Long-Term Value: Analyst

Investors who have an 18-month or longer time horizon should consider buying Morgan Stanley and Goldman Sachs, one analyst told CNBC.

"There are a couple issues that we have to get through—obviously Europe and still the regulatory overhang from Dodd-Frank and Basel, said Roger Freeman, a Barclays Capital analyst. "But I think if those do get resolved, I think that the majority of this business model is intact. I think there's a lot of long-term value."

Freeman added that both Goldman and Morgan Stanley are in better positions than their valuations suggest. He has a 'neutral' rating on the two banking stocks.

Banks Take a Beating

Freeman has a $150 price target on Goldman and a $27 price target on Morgan Stanley.

If the financial transaction taxthat is being proposed in Europe gets ratified, both NYSE and NASDAQ OMX could be impacted, Freeman said.

"This looks like it's really going after high-frequency trading, which is a smaller component of the European market than it is in the U.S.," Freeman said. "It's not clear that this is that big of an impact, but we still need to look at this closer."

If the volume of high-frequency trading decreases, Goldman and Morgan Stanley's European businesses would be impacted to some degree although commissions in the trades are very low. Commissions for this type of trading are less than a penny a share, he said.

"There's also opportunity with respect to Dodd-Frank for regulatory arbitrage going the other way," he said. "So there are a lot of things that no one can predict today, a lot of variables  that could cause trading to move to other geographic regions—both away and to us."

In an opposing view:


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Barclays Bank and/or an affiliate is a market-maker and/or liquidity provider in securities issued by Morgan Stanley or one of its affiliates.