KKR (KKR) has become Morgan Stanley's top pick instead of CME Group (CME) amid improving macroeconomic conditions and normalizing volatility, Morgan Stanley said in a note e-mailed Thursday.
"A capital markets rebound that's back on track is set to reaccelerate the private markets flywheel, supporting a robust earnings outlook for KKR," the brokerage said in a note to clients.
The private-equity giant's diversity across end markets is best placed to take advantage of "secular tailwinds" across private credit, infrastructure, private wealth, and insurance that back an outlook for a double-digit growth, Morgan Stanley said.
"We still see CME as a defensive beneficiary of uncertainty that may persist, but macro conditions have trended better than feared and volatility has since normalized from early 2Q levels," the brokerage said.
Morgan Stanley reiterated its overweight rating on the KKR stock, with a $150 price target.
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