Morgan Stanley Raises S&P and Dollar Targets

Morgan Stanley (NYSE: MS) has made several changes on its strategy team, with new outlooks in currency and index levels. The big change is in the S&P 500, although it was behind the curve there. Other changes seen were in the U.K. pound and the Japanese yen.

The big change is in the outlook for the S&P 500, which Morgan Stanley lifted to 1,600 over the next year from 1,434 previously offered. That being said, that is with the S&P down by 7.50 to 1,553.25. In short, this was a catch-up strategy call. The firm also raised its S&P earnings per share forecast to $103 from $99 and said that equities have a better risk-reward than credit at the current levels.

The bank expects big changes in the U.K. pound and the yen, which are currently at $1.5117 and 95.025, respectively. The pound sterling, or British pound, could fall to $1.48 from a prior target of $1.62 by the middle of 2013, and it lowered its target to $1.43 from $1.57 by year-end. The bank also raised its dollar target to 105 Japanese yen from 100 yen by year-end, and that is said to be the most aggressive of the money-center projections.

Another call was seen in the U.K. and Japanese stock markets, with Morgan Stanley lifting the FTSE 100 target to 7,000 from 6,500. Note that the index was roughly 6,490 going into that call. The Japan Topix target was raised to 1,270 from 1,200, versus close to 1,100 before today’s drop.