Morgan Stanley (NYSE:MS) is a big name on Wall Street, and many of its analysts are truly at the top of their game. While I wouldn’t blindly follow Morgan Stanley analysts, I do think they’re worth listening to whenever they update their notes or ratings.
For the most part, Morgan Stanley is quite bullish on many of the market’s darlings, especially in the mega-cap scene. Amid the market’s latest upswing, they’ve been proven right to stay bullish, even as some of the bears out there have expressed their doubts that the latest market run can continue.
In this piece, we’ll check in with three stocks spanning a wide range of industries that MS is quite upbeat about right now. With impressive price targets and overweight (or buy) ratings, the following plays may make for great Morgan Stanley stock picks in May 2024.
Adidas (ADDYY)
Morgan Stanley recently gave European apparel play Adidas (OTCMKTS:ADDYY) a big vote of confidence with a “double upgrade” to Overweight from Underweight, skipping the Neutral (or Hold) rating. Indeed, such double upgrades are quite rare, but they may suggest a potentially drastic change of the tides.
Most notably, analysts at Morgan Stanley think “lifestyle momentum has legs” as the “fashion pendulum” swings from “chunkier basketball shoes to so-called terrace shoes.” The analysts also pointed to specific pieces of footwear in the Adidas line that could do well from here, specifically Samba, Gazelle and Spezial.
As fashion trends shift in time for summer 2024, perhaps Adidas classics will be in higher demand compared to Jordans, high-tech runners and those “dad shoes” with large midsoles.
I think Morgan Stanley is right to praise Adidas as it continues its comeback from its late-2022 depths. Since hitting that bottom, the stock has soared more than 140%, an impressive showing that tells us it’s ready to thrive in the post-Yeezy era.
Seagate Technology (STX)
Data storage firm Seagate Technology (NASDAQ:STX) also won a nice upgrade from Morgan Stanley analysts in recent weeks. Led by big-name analyst Erik Woodring, the bank hiked STX stock to Overweight from Equal-Weight alongside a price target raised to $115.00 per share.
What’s the reason for the upgrade? Analysts see an opportunity to expand margins through numerous means. From “better pricing” to “build-to-order dynamics,” Seagate certainly has many levers it can pull to enhance profitability. Additionally, Morgan Stanley sees Seagate as a beneficiary of the generative AI boom.
Undoubtedly, the AI rush will likely see increased uptake for data storage hardware in addition to GPUs. In that regard, STX stock may very well be a stealthy way to play the AI uprising.
More recently, Seagate disappointed some when it noted delays in meeting orders for its innovative heat-assisted magnetic recording (HAMR) drives. The HAMR technology allows for greater areal density and seems to represent one of the latest breakthroughs in data storage solutions. In my view, a small delay won’t change demand for such a game-changing product. If anything, it’s likely to build up.
Netflix (NFLX)
Netflix (NASDAQ:NFLX) stock may have stumbled past its latest round of quarterly results. But Morgan Stanley is maintaining its bullish stance and $700 price target, which entails more than 23% in upside from Thursday’s close of around $565 per share.
Though NFLX stock has become a heck of a lot more expensive after another year of solid gains, the company has continued to demonstrate its dominance in the mature market of streaming. With one of the best content pipelines in the game that keeps subscribers engaged and subscribed, Netflix still stands above the crowd, even as its rivals look to unlock the full potential behind their IPs.
With hit limited series “Baby Reindeer” keeping viewers talking and the potential to offer refreshing new binge-worthy content we didn’t even know we wanted, I’m convinced NFLX stock has what it takes to blast right past Morgan Stanley’s $700 target this year.
At 40 times trailing price-to-earnings, perhaps the stock is getting too cheap as the firm shifts gears toward profitability and ever-so-slightly away from growth.
On the date of publication, Joey Frenette did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
