Investing.com -- Morgan Stanley (NYSE:MS) made adjustments to its US All Cap Growth Portfolio on Friday, adding two stocks while removing two others.
Specifically, the Wall Street firm added positions in DoorDash (NASDAQ:DASH) and GE Vernova LLC (NYSE:GEV), citing growth potential and alignment with key themes, while reducing exposure to Adobe (NASDAQ:ADBE) and completely removing UnitedHealth Group (NYSE:UNH).
Morgan Stanley introduced DoorDash to its portfolio to gain exposure to the leading food delivery company in the U.S.
According to the note, DoorDash's three-sided network, which connects customers, merchants, and delivery contractors, positions it well for continued growth. With approximately 60% market share, DoorDash has emerged as the top player in the sector, Morgan Stanley notes.
Moreover, the bank’s analysts also highlighted the stock’s “attractive valuation given multiple growth drivers” and its potential for expanding EPS growth.
They rate DoorDash as Overweight, with a price target of $150, offering about 6% upside from current levels.
GE Vernova, another new addition, was added for its leadership in electric power generation equipment. With global electricity needs rising, the company is well-positioned with a 40% market share in this sector.
“We are adding a position in GE Vernova Inc for three reasons: 1) leader in electrical generation equipment and services in an era of increasing electricity needs; 2) attractive valuation given potential margin expansion and top-line acceleration; and 3) from a portfolio perspective, adds exposure to Industrials and the powering AI theme,” the note states.
The stock is rated Overweight at Morgan Stanley, with a target price of $256.
On the other hand, the firm trimmed its position in Adobe to diversify its software exposure and reallocate to higher-growth stocks. While Adobe has underperformed relative to the broader market, Morgan Stanley still maintains a favorable view of the stock. However, it emphasized it would “rather have smaller exposure to many stocks than more concentrated exposure to a few software stocks.”
Lastly, UnitedHealth Group was removed from the portfolio due to its diminished weighting in the benchmark and slower growth prospects.
Although the stock performed well, delivering a 55% return since its last increase in 2021, Morgan Stanley sees more attractive opportunities in faster-growing sectors.
“We are removing the stock today because it has re-rated from 18x to 19x forward earnings, it is no longer a high weighting in the benchmark, and we see faster-growing opportunities elsewhere,” analysts explained.