Morgan Stanley sees a comeback in Wall Street deals underway — and expects some financial stocks to reap the benefits. Analyst Andrei Stadnik pointed to the fact that completed mergers and acquisitions are up 16% in the second quarter compared to the same period a year prior. That bodes well for a variety of asset managers, banks and advisors that benefit from a landscape with more deal-making, Stadnik said.
"2024 marks the start of M & A recovering from multi-decade lows," he told clients. Morgan Stanley's financials conference earlier this month bolstered the fact that the "capital markets recovery is firmly on track, even with not all of the component parts firing up," Stadnik said. High borrowing costs have cooled demand for the broader deals space in recent years, but JPMorgan hiked its second-quarter investment banking revenue guidance, which is a promising sign.
Still, the bank also acknowledged that an interest rate cut in the U.S. and the return of deals led by sponsors would help volume further rebound.
However, Goldman Sachs said sponsor-led mergers and acquisitions do not necessarily need a decrease in interest rates to take off. That is because sponsors have $1 trillion to $2 trillion of cash they need to deploy. Given this encouraging backdrop, Stadnik offered some ways to play the rebound in deals within the U.
S. stock market. Here are some of his ideas: Within asset managers, Stadnik called Blackstone an "under-appreciated" beneficiary of a better backdrop f.
