Morgan Stanley Equal Weight On Hudson City Bancorp (HCBK)

Morgan Stanley has an Equal-weight rating and a $13 price target on shares of Hudson City Bancorp HCBK. In a note to investors, Morgan Stanley writes, "What's new: HCBK announced a balance sheet restructuring where it paid off $12.5 bil in higher-rate putable borrowings funded by $5 bil in new, lower-rate shorter-term debt and the sale of $8.7 bil in MBS. This will result in a net after-tax charge of $644 mil, or $1.30 per share, in 1Q11, reducing tangible book to $9.57/shr. Overall, we view this as a positive, as it removes a major overhang on the stock and significantly improves its funding mix without raising new equity." Morgan Stanley goes on to say, "We believe the balance sheet restructuring, without a capital raise, is a key positive for HCBK, and should lead to a higher valuation multiple (currently at 1.0x TBV). However, low rates and the likelihood that it still receives an MOU are headwinds." Shares of HCBK lost 1 cent yesterday to close at $9.86.