S&P RAISES RECOMMENDATION ON SHARES OF MORGAN STANLEY TO BUY FROM HOLD (MS; 21.50):

An unconfirmed report in the Wall Street Journal says MS will receive $10 billion of capital from the U.S. Treasury, as part of a plan by the government to shore up the banking system. The investment will take the form of callable preferred shares with a 5% coupon and will include common warrants equal to 15% of the injection. We think the move will improve confidence in the company and provides MS with a low-cost source of callable capital. We are raising our target price by $12 to $30, equal to projected book value, as we expect the discount to peer multiples will narrow. -M. Albrecht