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| Morgan Stanley Advises Caution in Market Downturn, but Highlights Three Promising Stocks |
Morgan Stanley advises investors to sell any rallies as it anticipates further market downturns due to the aggressive interest rate hikes by the US Federal Reserve to control inflation. The bank suggests waiting until the bear market reaches its new low before buying again. The bank remains pessimistic about the earnings growth outlook despite recent government interventions to rescue depositors at the Silicon Valley Bank.
Despite its bearish outlook, Morgan Stanley still finds some stocks attractive. The bank has listed three stocks that it believes are promising, including tech giant Apple. Morgan Stanley's analyst Erik Woodring rates the stock as "overweight," with a price target of $180, roughly 19% above the current levels.
Another stock that Morgan Stanley finds promising is Snowflake, a cloud-based data warehousing company. The company serves thousands of clients in different industries, including 573 Forbes Global 2000 companies. The momentum is strong in the company's business, with a 53% YoY increase in revenue in the three months ending January 31. Morgan Stanley analyst Keith Weiss rates the stock as "overweight" with a price target of $215, implying a potential upside of 56%.
Costco, the membership-only big-box store operator, is the third stock on Morgan Stanley's list. Despite the ongoing threat from online merchants, Costco's physical store presence has remained resilient. The company's value proposition of selling consumer staples products at low prices has also made it attractive to budget-conscious consumers. In Costco's most recent fiscal quarter, net sales increased 6.5% YoY to $54.24 billion. Morgan Stanley analyst Simeon Gutman rates the stock as "overweight" with a price target of $520, roughly 9% above where the stock sits today.
Morgan Stanley's bullish outlook on the three stocks comes despite its bearish overall stance on the market. While the bank recommends caution, it is not ruling out the possibility of potential gains for investors who choose the right stocks.
