MS to Expand Private Firms Coverage Amid High-Growth Startup Interest

Morgan Stanley MS has introduced a dedicated page for private company research as rapidly growing startups gain traction among investors. This was first reported by Reuters, citing an internal memo.

Rationale Behind Morgan Stanley’s Move

Private firms were overlooked earlier due to their limited disclosures. However, as the scale of such entities continues to rise, it is becoming difficult to ignore them, with the artificial intelligence (AI) boom being integral to this shift.

Given their significant scale, institutional investors have been shifting to private markets to diversify their portfolios and generate higher returns. These privately listed firms are developing products and technologies that can disrupt the operations of long-standing market leaders. Thus, accredited investors are looking to invest in such firms once they opt to go public.

Katy Huberty, global director of Research at Morgan Stanley, said, “While we have been publishing on private companies since 2017, we are now expanding our private company ‍coverage to deliver deeper analysis, broaden our reach, and stay ahead of client demand.”

“Private companies have long been fundamental to ‍research, and client interest in these markets continues to grow as companies stay private for longer,” Huberty added.

This move aligns with Morgan Stanley’s efforts to strengthen its private markets offerings to generate higher revenues. In sync with this, last month, the company agreed to acquire EquityZen, a leading private shares platform.

Other Major Banks Taking Similar Steps

Major banks have been expanding their research coverage on unlisted entities this year, as some of the world’s most valuable startups, including OpenAI and SpaceX, have opted to remain private, unlike similar firms in the past.

In July, Reuters reported that JPMorgan JPM and Citigroup C have announced research expansion into private firms. JPMorgan released its first report on OpenAI and clarified that these brokerage reports will not feature estimates, price targets or ratings and will focus on AI and software as key areas of research.

Similarly, Citigroup will focus on nearly 100 most influential private firms, particularly in key sectors like AI, offering event-driven analysis on product launches, customer acquisitions and new business lines.

Morgan Stanley’s Zacks Rank & Price Performance

Over the past six months, Morgan Stanley’s shares have gained 28.7%, compared with the industry’s 22.7% growth.

Currently, Morgan Stanley sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

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