MORGAN STANLEY: These 19 stocks could get cut in half — or worse

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Morgan Stanley has released the stocks its analysts think could lose more than half their value in the next 12-18 months.

These “secularly challenged stocks,” as the bank calls its Wednesday report, are quite diverse, but a major portion of the list are retail chains. The industries Morgan Stanley analysts are most bearish on span from mall-based clothing stores like Abercrombie & Fitch and American Eagle, to big box chains like Target, and even financial services companies like Western Union.

“Our economics team’s longtime base case of a synchronous global recovery, modest increases in inflation pressures, and a gradual removal of monetary policy accommodation has now been embraced, by and large, by the consensus.”

While the report is quite pessimistic, it’s important to note that the possible drops are analysts’ bear cases, or worst-case scenarios for the companies.

To compile the list, Morgan Stanley’s equity research team started with the full list of stocks its analysts rate as underweight. The bank then focused on stocks with an “unfavorable risk-reward skew,” looking for stocks where the cons outweighed the pros.

Here are the 19 stocks Morgan Stanley says stand to lose the most from secular pressures in the next 12-18 months:


19. Tenneco

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Markets Insider

Ticker: TEN

Sector: Consumer Discretionary/Industrials

Downside to bear: 53.1%

Market cap: $3.41 billion

Year-to-date performance: +0.03%

Source: Morgan Stanley


18. BorgWarner Inc.

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Markets Insider

Ticker: BWA

Sector: Consumer Discretionary/Industrials

Downside to bear: 54%

Market cap: $11 billion

Year-to-date performance: +28.93%

Source: Morgan Stanley


17. United Parcel Service

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Markets Insider

Ticker: UPS

Sector: Transportation

Downside to bear: 54.1%

Market cap: $103.8 billion

Year-to-date performance: +3.03%

Source: Morgan Stanley


16. American Eagle Outfitters

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Markets Insider

Ticker: AEO

Sector: Retail

Downside to bear: 55.6%

Market cap: $2.39 billion

Year-to-date performance: -10.35%

Source: Morgan Stanley


15. Myriad Genetics

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Markets Insider

Ticker: MYGN

Sector: Healthcare

Downside to bear: 57.0%

Market cap: $2.41 billion

Year-to-date performance: +98.94%

Source: Morgan Stanley


14. Juniper Networks

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Markets Insider

Ticker: JNPR

Sector: Technology

Downside to bear: 57.7%

Market cap: $9.90 billion

Year-to-date performance: -14.1%

Source: Morgan Stanley


13. CBL & Associates Properties

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Markets Insider

Ticker: CBL

Sector: Property

Downside to bear: 58.3%

Market cap: $2.01 billion

Year-to-date performance: -28.39%

Source: Morgan Stanley


12. Waddell & Reed Financial

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Markets Insider

Ticker: WDR

Sector: Financial

Downside to bear: 61.1%

Market cap: $1.72 billion

Year-to-date performance: +0.15%

Source: Morgan Stanley


11. Norfolk Southern

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Markets Insider

Ticker: NSC

Sector: Transportation

Downside to bear: 62.3%

Market cap: $38.26 billion

Year-to-date performance: 20.28%

Source: Morgan Stanley


10. Imperva

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Markets Insider

Ticker: IMPV

Sector: Technology

Downside to bear : 62.0%

Market cap: $1.51 billion

Year-to-date performance: +13.16%

Source: Morgan Stanley


9. Waddell & Reed Financial

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Markets Insider

Ticker: TEVA

Sector: Healthcare

Downside to bear: 66.4%

Market cap: $18.76 billion

Year-to-date performance: -62.86%

Source: Morgan Stanley


8. American Axle & Manufacturing Holdings

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Markets Insider

Ticker: AXL

Sector: Consumer Discretionary/Industrials

Downside to bear: 67.9%

Market cap: $2.08 billion

Year-to-date performance: -6.57%

Source: Morgan Stanley


7. DSW

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Markets Insider

Ticker: DSW

Sector: Retail

Downside to bear: 70.6%

Market cap: $1.50 billion

Year-to-date performance: -0.71%

Source: Morgan Stanley


6. Bioverativ

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Markets Insider

Ticker: BIVV

Sector: Healthcare

Downside to bear: 71.8%

Market cap: $6.52 billion

Year-to-date performance: 30.51%

Source: Morgan Stanley


5. Hawaiian Holdings

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Markets Insider

Ticker: HA

Sector: Transportation

Downside to bear: 73.6%

Market cap: $2.18 billion

Year-to-date performance: -35.98%

Source: Morgan Stanley


4. Castlight Health

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Markets Insider

Ticker: CSLT

Sector: Healthcare

Downside to bear: 54.1%

Market cap: $327.28 million

Year-to-date performance: -14.14%

Source: Morgan Stanley


3. Abercrombie & Fitch

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Markets Insider

Ticker: ANF

Sector: Retail

Downside to bear: 85.5%

Market cap: $921.19 million

Year-to-date performance: +17.96%

Source: Morgan Stanley


2. Avis Budget Group

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Markets Insider

Ticker: CAR

Sector: Consumer Discretionary/Industrials

Downside to bear %:

Market cap: $3.41 billion

Year-to-date performance: +9.75%

Source: Morgan Stanley


1. Gogo

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Markets Insider

Ticker: GOGO

Sector: Telcom services

Downside to bear: 90.6%

Market cap: $924 million

Year-to-date performance:+5.54%

Source: Morgan Stanley


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