Morgan Stanley Identifies Buy-Rated Stocks Expected to Outperform Market

Morgan Stanley has compiled a list of global stocks that it believes will surpass market expectations. The investment bank asked its analysts to select stocks in which they have high confidence that the market has underestimated their potential earnings. Several pharmaceutical companies have made the bank’s buy-rated list, including Novo Nordisk, the manufacturer of weight-loss drug Ozempic. The analysts anticipate an upgrade to Novo Nordisk’s guidance prior to its second-quarter results announcement on August 10. Grifols and Indivior are also pharmaceutical companies that the bank is positive on, citing expectations of a solid performance and a strong quarter, respectively.

In addition to pharmaceuticals, Morgan Stanley has identified Deutsche Telekom as a buy-rated stock due to improved outlooks in the US and Germany. The bank also favors entertainment company Scout24 for its steady subscription revenues. French materials manufacturer Saint-Gobain is another pick, with the bank highlighting management’s optimism on margins discussed at its recent annual general meeting. Lastly, energy company RWE is considered an overweight choice by the analysts, who anticipate future earnings-per-share upgrades.

The analysts acknowledge that reporting seasons in the post-COVID era have been characterized by positive surprises. While they expect another positive beat ratio for the second quarter, they caution that the magnitude of the beat may be closer to normal levels due to a slowdown in global and European economic momentum.