BANKS need to defend their turf as young
consumers start to shape the US economy, while Apple Inc. and Google Inc. are
well-positioned to benefit, according to Morgan Stanley.
Millennials and Generation Z—children born
post-2000s—will provide an above-average boost to the economy over a 20- to
30-year horizon, economists including Ellen Zentner wrote in a research paper
dated June 9. They asked the firm’s analysts for ideas about which stocks might
Big banks may suffer as younger customers,
who are digital-banking or even mobile-banking natives, shift to
financial-technology and Big Tech firms like PayPal Holdings Inc., Amazon.com Inc.
and Google Inc., according to analysts led by Betsy Graseck. They see Bank of
America Corp. as a winner in mobile, Capital One Financial Corp. leading the
way in products tailored to those under 18, and First Republic Bank ahead on
products tailored to millennials. Discover Financial Services is succeeding
with its strong customer service, they said.
Young Americans tend to spend a
disproportionate share of money on things like cell phones, apparel and food
away from home, analysts led by Kimberly Greenberger wrote. Overlaying youth
trends with demographic data, they see the likes of Chipotle Mexican Grill
Inc., Starbucks Corp. and Nike Inc. as among consumer-discretionary names
likely to benefit.
Apple is well-positioned to benefit given
its tech-enabled health-care offerings, along with employee-mobility and work
force-efficiency service providers like Salesforce.com Inc. and Adobe Inc.,
according to analysts led by Katy Huberty.
The changing preferences of generations won’t be good for every company,
though. Analysts led by Ravi Shanker see legacy parcel companies United Parcel
Service Inc. and FedEx Corp. being hurt by trends toward retailer incentives
for picking up items at stores and delivering online orders out of stores. Bloomberg