MORGAN STANLEY: These 19 stocks that could get cut in half --  or worse

ScissorsHarry How/Getty ImagesWichita State’s Gregg Marshall cuts down the nets.

Morgan Stanley has released the stocks its analysts think could lose more than half their value in the next 12-18 months.

These “secularly challenged stocks,” as the bank calls its Wednesday report, are quite diverse, but a major portion of the list are retail chains. The industries Morgan Stanley analysts are most bearish on span from mall-based clothing stores like Abercrombie & Fitch and American Eagle, to big box chains like Target, and even financial services companies like Western Union.

“Our economics team’s longtime base case of a synchronous global recovery, modest increases in inflation pressures, and a gradual removal of monetary policy accommodation has now been embraced, by and large, by the consensus.”

While the report is quite pessimistic, it’s important to note that the possible drops are analysts’ bear cases, or worst-case scenarios for the companies.

To compile the list, Morgan Stanley’s equity research team started with the full list of stocks its analysts rate as underweight. The bank then focused on stocks with an “unfavorable risk-reward skew,” looking for stocks where the cons outweighed the pros.

Here are the 19 stocks Morgan Stanley says stand to lose the most from secular pressures in the next 12-18 months:

19. Tenneco

Ticker: TEN

Sector: Consumer Discretionary/Industrials

Downside to bear: 53.1%

Market cap: $US3.41 billion

Year-to-date performance: +0.03%

Source: Morgan Stanley

18. BorgWarner Inc.

Ticker: BWA

Sector: Consumer Discretionary/Industrials

Downside to bear: 54%

Market cap: $US11 billion

Year-to-date performance: +28.93%

Source: Morgan Stanley

17. United Parcel Service

Ticker: UPS

Sector: Transportation

Downside to bear: 54.1%

Market cap: $US103.8 billion

Year-to-date performance: +3.03%

Source: Morgan Stanley

16. American Eagle Outfitters

Ticker: AEO

Sector: Retail

Downside to bear: 55.6%

Market cap: $US2.39 billion

Year-to-date performance: -10.35%

Source: Morgan Stanley

15. Myriad Genetics

Ticker: MYGN

Sector: Healthcare

Downside to bear: 57.0%

Market cap: $US2.41 billion

Year-to-date performance: +98.94%

Source: Morgan Stanley

14. Juniper Networks

Ticker: JNPR

Sector: Technology

Downside to bear: 57.7%

Market cap: $US9.90 billion

Year-to-date performance: -14.1%

Source: Morgan Stanley

13. CBL & Associates Properties

Ticker: CBL

Sector: Property

Downside to bear: 58.3%

Market cap: $US2.01 billion

Year-to-date performance: -28.39%

Source: Morgan Stanley

12. Waddell & Reed Financial

Ticker: WDR

Sector: Financial

Downside to bear: 61.1%

Market cap: $US1.72 billion

Year-to-date performance: +0.15%

Source: Morgan Stanley

11. Norfolk Southern

Ticker: NSC

Sector: Transportation

Downside to bear: 62.3%

Market cap: $US38.26 billion

Year-to-date performance: 20.28%

Source: Morgan Stanley

10. Imperva

Ticker: IMPV

Sector: Technology

Downside to bear : 62.0%

Market cap: $US1.51 billion

Year-to-date performance: +13.16%

Source: Morgan Stanley

9. Waddell & Reed Financial

Ticker: TEVA

Sector: Healthcare

Downside to bear: 66.4%

Market cap: $US18.76 billion

Year-to-date performance: -62.86%

Source: Morgan Stanley

8. American Axle & Manufacturing Holdings

Ticker: AXL

Sector: Consumer Discretionary/Industrials

Downside to bear: 67.9%

Market cap: $US2.08 billion

Year-to-date performance: -6.57%

Source: Morgan Stanley

7. DSW

Ticker: DSW

Sector: Retail

Downside to bear: 70.6%

Market cap: $US1.50 billion

Year-to-date performance: -0.71%

Source: Morgan Stanley

6. Bioverativ

Ticker: BIVV

Sector: Healthcare

Downside to bear: 71.8%

Market cap: $US6.52 billion

Year-to-date performance: 30.51%

Source: Morgan Stanley

5. Hawaiian Holdings

Ticker: HA

Sector: Transportation

Downside to bear: 73.6%

Market cap: $US2.18 billion

Year-to-date performance: -35.98%

Source: Morgan Stanley

4. Castlight Health

Ticker: CSLT

Sector: Healthcare

Downside to bear: 54.1%

Market cap: $US327.28 million

Year-to-date performance: -14.14%

Source: Morgan Stanley

3. Abercrombie & Fitch

Ticker: ANF

Sector: Retail

Downside to bear: 85.5%

Market cap: $US921.19 million

Year-to-date performance: +17.96%

Source: Morgan Stanley

2. Avis Budget Group

Ticker: CAR

Sector: Consumer Discretionary/Industrials

Downside to bear %:

Market cap: $US3.41 billion

Year-to-date performance: +9.75%

Source: Morgan Stanley

1. Gogo

Ticker: GOGO

Sector: Telcom services

Downside to bear: 90.6%

Market cap: $US924 million

Year-to-date performance:+5.54%

Source: Morgan Stanley

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