- Morgan Stanley comments on CB Richard Ellis Group (NYSE:CBG) after news the co will be added to the S&P 500 Index after the market's close on Thursday, October 12 replacing BellSouth, which is being acquired.
It is estimated that index funds will have to acquire about 18.2 million shares. The 20-day average trading volume has been about 940,000, and buying demand could last 20 days. The firm thinks the stock will rally on the news, and they expect there will be significant demand over the next month to support the stock at its current price and at higher prices.
They reiterate Overweight investment rating and believe that CB Richard Ellis is well-positioned to achieve long-term earnings growth targets. Firm believes the recent pullback represents a good buying opportunity, even after the recent rally from lows. They think any selling into strength is premature ahead of 3Q06 earnings, which should exceed expectations, and support the stock. However, they still see risks associated with the almost 28% exposure of Americas' investment sales, which the firm believes is priced into the current valuation.
Notablecalls: You never buy the first day of the S&P addition. One can even consider shorting the common if it trades up more than say 10% in the pre mkt. But as MS notes, there will be significant demand over the next month, meaning the bias will be to the upside now. One to keep on the radar.
It is estimated that index funds will have to acquire about 18.2 million shares. The 20-day average trading volume has been about 940,000, and buying demand could last 20 days. The firm thinks the stock will rally on the news, and they expect there will be significant demand over the next month to support the stock at its current price and at higher prices.
They reiterate Overweight investment rating and believe that CB Richard Ellis is well-positioned to achieve long-term earnings growth targets. Firm believes the recent pullback represents a good buying opportunity, even after the recent rally from lows. They think any selling into strength is premature ahead of 3Q06 earnings, which should exceed expectations, and support the stock. However, they still see risks associated with the almost 28% exposure of Americas' investment sales, which the firm believes is priced into the current valuation.
Notablecalls: You never buy the first day of the S&P addition. One can even consider shorting the common if it trades up more than say 10% in the pre mkt. But as MS notes, there will be significant demand over the next month, meaning the bias will be to the upside now. One to keep on the radar.
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