Morgan Stanley (MS) Sinks in Sympathy with Banking Peers

Morgan Stanley (NYSE:MS) is joining its peers in the banking sector on a ride south today, last seen off 3.5% at $25.02. This negative price action is likely the result of a round of price-target cuts on such stocks as Bank of America Corp (NYSE:BAC), Citigroup Inc (NYSE:C), and Goldman Sachs Group Inc (NYSE:GS) from brokerage firm Oppenheimer, as well as lingering “Brexit” concerns. Meanwhile, banks received an upbeat write-up in Barron’s (subscription required), which called the stocks a bargain, saying “U.S. bank probably are in their best shape in decades.”

Over the last 12 months, MS has given up 35.6% of its value. After repeatedly running into trouble near the $28 level since April, the shares were firmly rejected by their 150-day moving average on Thursday, June 23 -- the day of the “Brexit” referendum vote. Since then, MS has been unable to overtake the $26 mark on a closing basis.

Analysts appear to have mixed expectations for the stock, with eight calling MS a “buy” or better, compared to six “hold” ratings. Elsewhere, however, bearish sentiment was on the rise throughout June. Short interest, for example, rose by nearly 31% during the two most recent reporting periods -- though these bearish bets still account for just over 1% of MS’ available float.

Among options traders, pessimistic bets have been popular in recent weeks. In fact, the stock’s 50-day put/call volume ratio across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits at 1.13 -- higher than 90% of all readings in the past year. Meanwhile, thanks to some unusually action-packed sessions just before and after the “Brexit” vote, open interest in Morgan Stanley’s (NYSE:MS) options pits is seated at an annual peak, with more than 1.8 million contracts outstanding. Today, however, activity has cooled off, with the stock’s options crossing the tape well below the average intraday rate.