The bank said the overall outlook for the European media industry remained cautious, but that Havas, with its broad range of services in its main agency networks Euro RSCG, Arnold Worldwide and the Media Planning Group, is "well placed to benefit from any increase in adspend volumes".
The comments, along with the news that the bank has upgraded the group's stock to "overweight" from "underweight" pushed Havas shares up 1.7% this morning in Paris to €2.92.
A statement from Morgan Stanley said: "We believe that agencies have responded to this downturn in advertising spend by increasing their breadth of service as much as possible, in order to increase their share of falling marketing budgets. Havas' strategy is a good example."
However, Morgan Stanley said that the European industry would continue to suffer as the value of the euro continues to fall, while first-quarter revenues will be disappointing compared with the last quarter of 2002.
It said that the first quarter of 2003 would be the "trough" for the ad industry and that January and February adspend has been weak as a result of the war in Iraq.
Morgan Stanley also changed its price target for the agency to €4 from €5, as a result of higher interest rates for debt liabilities expected in 2006.
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