Morgan Stanley’s Stock Recommendations

Morgan Stanley, a renowned investment bank, has identified several global stocks that it predicts will outperform the market. In a recent investor note, the bank selected stocks based on analysts’ high conviction that their potential for beating market expectations is not adequately reflected in current earnings announcements.

Pharmaceutical Stocks with Strong Potential

Among Morgan Stanley’s top picks are three pharmaceutical companies. The bank is particularly bullish on Novo Nordisk, the manufacturer of the weight-loss drug Ozempic. Analysts anticipate a significant upgrade in guidance prior to the company’s 2Q results announcement on August 10. Additionally, Grifols is expected to deliver a solid performance, while Indivior is projected to have a strong quarter.

Other Promising Stocks

Morgan Stanley also recommends Deutsche Telekom due to its improved outlook, driven by positive trends in the US and Germany. The bank is optimistic about entertainment company Scout24, primarily because of its steady subscription revenues. Furthermore, French materials manufacturer Saint-Gobain is seen as a promising investment, as the market has yet to fully incorporate the company management’s optimistic margin projections discussed at the annual general meeting. Lastly, energy company RWE is another overweight choice for the analysts, who anticipate future earnings-per-share upgrades.

Analysts’ Perspective on Market Expectations

The analysts at Morgan Stanley acknowledge that reporting seasons in the post-COVID era have often led to positive surprises. However, they caution that while another positive beat ratio is likely for 2Q23, the recent slowdown in global and European economic momentum suggests that the magnitude of these positive surprises will be more in line with normal levels.