UPDATE: Morgan Stanley Lowers PT on Wells Fargo to $40 (WFC)

Morgan Stanley is out with its report today on Wells Fargo WFC, lowering its PT from $42 to $40. In a note to clients, Morgan Stanley writes, "We are overweight WFC on improving credit in 1H11 and rising PPoP in 2H11 as expenses fade and cross sell in the newly converted Eastern regions drives core top line. Our $40 price target implies 1.7x P/B, which makes sense as we think WFC will be able to generate a 15.5% ROE in 2013, significantly above its cost of equity of 10.85%." At the time of posting, shares of WFC were trading pre-market at $28.82, down 0.03% from Wednesday's close.