Morgan Stanley's Rally Expectation for 2025: Which Stocks?

Morgan Stanley's Rally Expectations for Q4 2025

Morgan Stanley indicates that stocks may present potential rally opportunities in the fourth quarter of 2025. According to this analysis, while US stock markets are trading at all-time high levels, three key names among small-cap stocks stand out with the potential for significant gains.

Economic Uncertainties and Investor Interest

During this period, economic data shows signs of cooling, while investors harbor optimism that a loosening of monetary policy could revitalize the US economy. CME's FedWatch tool indicates a high probability of the Federal Reserve cutting interest rates by at least a quarter point at its next meeting.

Stocks with High Portfolio Weighting

Morgan Stanley analysts have highlighted three names among small and mid-cap stocks that have not yet fully realized their value. These stocks, with market capitalizations under $20 billion, are being tracked with a "HIGH PORTFOLIO WEIGHTING" note by the bank. Analysts project an increase of between 20% and 50% for these stocks.

Wayfair: The Rising Star of E-Commerce

The bank highlights e-commerce furniture retailer Wayfair as one of its favored stocks. With a target price of $130, this implies a 44% increase in the stock over the next 12 months. Analyst Simeon Gutman states, "Due to expectations of an interest rate cut cycle and hopes that the housing cycle will bottom out, Wayfair is emerging as one of the fastest-growing assets in the internet sector."

Cinemark and the Cinema Sector

Morgan Stanley also has an optimistic view on the cinema chain Cinemark. The bank foresees an increase of over 20% with a target price of $35. Benjamin Swinburne, head of US media research, believes that rumors of movie theaters disappearing are exaggerated and predicts that box office revenue will reach $11 billion for the fiscal year 2026.

Lionsgate: Growth Potential in the Media Sector

Film and television producer Lionsgate is another name Morgan Stanley expects to rise. Regarding the stock, which has shown a slight decline since the beginning of the year, the bank comments, "It appears to be on a path towards higher earnings in the consolidated media landscape after separating from Starz."

This information is not investment advice and is provided for informational purposes only.