Morgan Stanley’s Best Stock Picks: 15 Stocks To Own For 2025

1. M&T Bank Corporation (NYSE:MTB)

Number of Hedge Fund Holders In Q2 2024: 34

Share Price Target Upside: 30%

Share Price Target: $220

M&T Bank Corporation (NYSE:MTB) is a regional bank headquartered in Buffalo, New York. It is one of the biggest banks of its kind in terms of assets, with the figure sitting at a cool $208 billion as of December 2023. M&T Bank Corporation (NYSE:MTB) has benefited from high interest rates, as they have allowed it to grow its revenue from $5.9 billion in 2020 to $9.3 billion in 2023 for a 57% growth. M&T Bank Corporation (NYSE:MTB) has some exposure to the troubled commercial real estate sector though. As of Q2, its CRE loans were $31.5 billion which increases the risk of headwinds in case real estate defaults pick up particularly if there is a recession. Additionally, M&T Bank Corporation (NYSE:MTB)’s shares could suffer in the future if rate cuts are delayed. This is because the bank’s net interest income (NII) is struggling as it faces off with high deposit costs which will continue to be sticky in case of higher rates.

On the flip side, lower rates could also reduce M&T Bank Corporation (NYSE:MTB)’s NII. Here’s how management is preparing in advance for this:

“Higher for longer rates in the first half of the year allowed us to take additional actions to protect NII from lower interest rate environment.

For example, in the first half of the year, we shifted $3 billion of cash into securities and added $5 billion in forward starting cash flow hedges, which became active in 2025. During — or further, we expect that the downside in interest-bearing deposit beta will be approximately 30% to 40% in the first couple of rate cuts.”

MTB tops the list of MS’ top stocks for 2025 by share price percentage upside. But our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MTB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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