There's no shortage of news from Morgan Stanley (MS: sentiment, chart, options) this morning, and most of it is bleak. Moody's Investors Service warned that it might cut the long-term debt rating of Morgan Stanley, as well as its sector peer Goldman Sachs (GS). Meanwhile, S&P Equity Research slashed its price target on MS from $30 to $18, and razored its 2008 earnings-per-share estimates from $4.09 to 33 cents.

Plus, Morgan Stanley is now the target of a class-action lawsuit regarding its involvement in the underwriting of a preferred-share offering for Lehman Brothers earlier this year. In the same SEC filing, MS confessed, "to the extent we are not able to access the debt markets on acceptable terms in the future, we may increase our use of deposit funding and other funding sources generally available to a financial holding company, and/or may seek to raise funding and capital through equity issuance."

The silver lining for MS today? Ladenburg Thalmann analyst Richard Bove has backed off slightly from some bearish notes he made Thursday. Bove cut the stock's price target from $44 to $19, and slashed his 2008 and 2009 earnings expectations. However, he said this morning that he's taken heart from news that Morgan Stanley's exposure to Lehman Brothers is much lower than he previously thought. He also noted the potential for Mitsubishi UFJ Group (MTU) to invest in the firm, and added, "this firm, if left to run its businesses, is likely to produce continuous profits, even though at much reduced rates. For this reason, companies should continue to do business with Morgan Stanley and keep it in business."

Unfortunately, Bove's reassurance hasn't kept MS from plunging in today's session. At last check, the stock is down 32%, and earlier tapped a new annual low of $7.84.