Morgan Stanley was badly bruised during the financial crisis and its shares continue to suffer, prompting calls for breaking up the company.  At its current share price of $23.20, the stock is far below where it was trading earlier this year, which was more than $30.  Morgan Stanley CEO James Gorman, has made a number of fixes to the business, but the stock continues to languish as investors fret about the growth prospects of Morgan Stanley and the broader financial services sector.  

In comes respected analyst Brad Hintz of Sanford C. Bernstein who issued a report titled “Is The Firm Worth More Dead or Alive.”  In  this report, Mr. Hintz concludes that the best way to unlock the firm's value is by breaking it up, noting:

"Investors have grown impatient with the performance of Morgan Stanley,  To be sure our analysis is not an endorsement of Morgan Stanley dismantling its institutional trading operation, but makes an illustrative point that the market is overly discounting the firm’s inherent value.”

According to his calculations, the company could liquidate its capital markets operation and pay a big one-time dividend of $8.66 to shareholders.  The big 3 remaining businesses - its M&A franchise, asset management and wealth management - would be worth $31.47 a share, almost 30% higher than where the stock is currently trading.  In short, he thinks the stock may offer a good value at the current level.

“While the firm undoubtedly has its share of challenges, we believe current valuations offer an attractive entry point for long-term, value oriented investors.”    [DealBook 6/10/11]