Morgan Stanley still sees upside at Barclays despite investors' concerns

10th Feb 2015 09:45

Morgan Stanley has reiterated its 'overweight' position on UK banking group Barclays, saying that the value of its non-core operations are "under-appreciated" by the market.The US broker last week upgraded its stance on Barclays from 'equalweight', saying the "the market does not fully recognise the value embedded in non-core, which should crystallise as the division unwinds".It values that the remainder of the non-core division at 8p per share, whereas the market is pricing in around 40p per share of negative value.Analysts acknowledged that many bearish investors have raised concerns since its upgrade on Barclays on 3 February, and despite many valid concerns about the investment case it still sees an "upward skew" to the risk-reward balance.For example, some investors are concerned about the size of future potential legacy conduct costs, political risk and too-optimistic consensus forecasts.Nevertheless, the stock trading at just 0.9 times tangible net asset value estimates for 2015, the valuation is "inexpensive" versus other peers in the UK and Europe, Morgan Stanley said.It maintained a 315p target price for the stock, which was down 1.5!% at 249.85p by 10:17 on Tuesday.