Morgan Stanley Names Top Bank Stocks for Investors

Investing.com -- Morgan Stanley has updated its Banks Financials’ Finest list, highlighting two banking stocks that the firm believes offer compelling investment opportunities. The selections include a major European lender undergoing strategic transformation and a U.S. regional bank trading at an attractive valuation.

Get premium news and insight, AI stock picks, and research tools by upgrading to InvestingPro

The investment bank’s latest picks reflect confidence in institutions demonstrating strong capital returns, operational efficiency improvements, and clear paths to earnings growth. Here are the stocks that made Morgan Stanley’s top rankings in the banking sector:

1. UniCredit S.p.A. (CRDI.MI)

Morgan Stanley upgraded UniCredit to Overweight on February 10th, citing the bank’s 2026-28 business plan as a transformational shift in strategy. The firm expects the plan to drive meaningful consensus upgrades and a higher valuation multiple. The new strategy targets 5% loan compound annual growth rate, with Italy and Germany growing above nominal GDP growth. UniCredit projects excellent operating leverage, with absolute cost reduction by 2028 and 2030, achieving a 32% cost-to-income ratio versus 35% in consensus estimates.

Morgan Stanley believes the strategic shift will enable UniCredit to deliver strong dividend per share growth of 15% from 2025-28 and tangible book value per share growth of 10% during the same period, while maintaining an approximately 8% overall yield in line with the sector. The firm projects UniCredit’s CET1 ratio to remain around 15% during the plan period, considering 80 basis points from tax loss carry forward absorption, 80% payout, and approximately 4.5% risk-weighted assets growth. Morgan Stanley estimates UniCredit would operate with 7.5 billion euros in excess capital by 2028, worth 13% of market cap, providing flexibility for mergers and acquisitions or additional capital returns.

2. Huntington Bancshares (HBAN.O)

Morgan Stanley named Huntington Bancshares as its top pick among midcap U.S. banks, citing cheap valuation and a clear path to $1.90 earnings per share by 2027. The firm’s estimates incorporate lower revenue growth and lower expense growth compared to company guidance.

Shares are trading at just 9.4 times Morgan Stanley’s 2027 EPS estimate, representing a discount to peers. Morgan Stanley maintains an Overweight rating with a $21 price target, applying an 11 times price-to-earnings multiple on 2027 earnings, implying 18% upside.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.