Morgan Stanley (MS) announced on Thursday that it would acquire E*Trade Financial Corp in an all-stock deal valued nearly $13 billion, as it seeks to boost its wealth management division.
The deal is expected to be finalized in Q4 of 2020.
Morgan Stanley shares closed lower for the fourth time in the past ten trading sessions in New York on Thursday. It has also been the steepest single-session loss since May 13th 2019. The stock went down 4.55% ($2.56) to $53.75, after touching an intraday low at $53.60, or a price level not seen since February 3rd ($52.58).
Shares of Morgan Stanley have risen 5.14% so far in 2020 compared with a 4.41% gain for the benchmark index, S&P 500 (SPX).
In 2019, Morgan Stanley’s stock went up 28.93%, thus, it again outperformed the S&P 500, which registered a 28.88% gain.
As part of the agreement, Morgan Stanley will obtain E*Trade’s over 5.2 million client accounts and $360 billion of retail client assets.
At the same time, under the agreement, shareholders of E*Trade Financial Corp will receive 1.0432 Morgan Stanley shares for each of their shares.
Mike Pizzi, E*Trade Financial Corp’s Chief Executive Officer, will continue to head the business after the merger, Morgan Stanley said.
Analyst stock price forecast and recommendation
According to CNN Money, the 22 analysts, offering 12-month forecasts regarding Morgan Stanley’s stock price, have a median target of $61.50, with a high estimate of $76.00 and a low estimate of $45.00. The median estimate represents a 14.42% upside compared to the closing price of $53.75 on February 20th.
The same media also reported that at least 13 out of 25 surveyed investment analysts had rated Morgan Stanley’s stock as “Buy”, while 9 – as “Hold”. On the other hand, 1 analyst had recommended selling the stock.