MS sees Sabadell as 'fairly' valued, restarts at 'equal-weight' 

** Morgan Stanley resumes coverage on Spanish lender Sabadell SAB with an "equal-weight" rating, saying that while dividend yield in short term should be supportive for the stock, it sees it as "fairly valued" vs European peers and needs more clarity on excess capital

** The broker estimates a 22% dividend yield in the next six months, as Sabadell is due to pay a special dividend after close of TSB sale which along with ordinary one remaining for 2025 will add up to 0.67 euro

** MS says the bank trades on 9.3x P/E 2027 excluding the special dividend, which is about 10% cheaper than its domestic peers, but "fair" in a European context

** MS forecasts the bank's CET1 to be at 13.6% at the end of 2026, which "leaves potential for further distributions via either dividends or buybacks, and/or leaves room for M&A optionality"

** It also estimates its net interest income, excluding the sale of its British unit TSB, to have bottomed out in H1 and to grow 2.5% to 3% in 2026-2027

** The brokerage expects its Q3 results to be aligned with peers