Morgan Stanley Names Some Of Its Buys as Wall Street Spots Opportunity in Beaten-Down Stocks

Morgan Stanley is telling investors to look past recent market weakness, identifying several stocks where the Wall Street firm believes the sell-off has created attractive buying opportunities.

CNBC Pro reported that Morgan Stanley analysts pointed to Warner Music Group, Darden Restaurants, SiTime and EchoStar, while also maintaining a bullish view on SpaceX. The common theme is that recent weakness may be obscuring longer-term value, from Warner Music's catalog to EchoStar's spectrum holdings and SpaceX exposure.

Morgan Stanley naming Warner Music a top pick is unusual. Analyst Cameron Mansson-Perrone argued that investors may be significantly undervaluing Warner's catalog.

"Catalog value alone may represent > $30 per share of value within Warner Music shares, suggesting upside at current levels despite attributing nothing to frontline," Mansson-Perrone wrote, according to CNBC.

That argument comes as Warner Music shares have fallen more than 9% in 2026. Morgan Stanley believes concerns about the company's growth outlook have become excessive. "We see [overweight-rated] WMG shares as offering attractive end-market exposure through a market leader that has been simultaneously taking share and expanding margins," Mansson-Perrone said.

Warner Music's latest financial results support that thesis. The company reported fiscal third-quarter revenue of $1.86 billion, up 10% from the same period a year earlier. Streaming revenue climbed 12.3%, while adjusted OIBDA increased 16% to $433 million. Net income reached $200 million, reversing a $16 million loss in the year-earlier period.

The company also reported particularly strong momentum in subscription streaming. Recorded Music subscription revenue increased 12.5%, while Music Publishing streaming revenue rose 14.4%. Warner said improved economics from digital service provider agreements, subscriber growth and market-share trends contributed to the performance.

Warner's catalog is extensive. Through Warner Chappell Music, the company controls a catalog of more than one million copyrights, while its recorded-music operations include labels such as Atlantic, Parlophone and Warner Records.

Morgan Stanley also sees opportunity elsewhere. Darden Restaurants, the owner of Olive Garden and LongHorn Steakhouse, remains attractive ahead of its Sept. 24 earnings report, according to analyst Brian Harbour.

Morgan Stanley raised its price target on Darden to $255 from $236. Harbour expects LongHorn could outperform expectations even as consumer concerns and inflation remain risks.

EchoStar offers a different investment thesis. Analyst Sean Diffley sees the satellite communications company as an indirect way for public-market investors to gain exposure to SpaceX, while also benefiting from the potential value of EchoStar's wireless spectrum holdings.

"We concluded that the discount is too wide to ignore," Diffley wrote. He set a $134 price target and said potential share buybacks could provide another catalyst. Morgan Stanley is also overweight SiTime, a semiconductor company specializing in precision timing technology used to synchronize electronic systems.