Retailers could be acquisition targets: Morgan Stanley

NEW YORK (Reuters) - Retail stocks were lower on Monday, dropping along with weakness in the broader market, but Morgan Stanley sees a higher-than-average likelihood that many stocks in the sector could receive acquisition offers in the coming year.

The firm sees nine consumer discretionary stocks that rank high in its acquisition likelihood model, the most of any sector, although the consumer staples, healthcare and technology groups were also seen as offering potential candidates.

Among retailers, Abercrombie & Fitch Co , J C Penney Co and American Eagle Outfitters Inc were all seen as having a high possibility of receiving an offer, although the model does not consider the likelihood of an offer being accepted or closed.

Morgan Stanley's model, which looks at companies with market caps over $2 billion and year-to-date trading volume of $3 billion, considers 10 factors, including dividend yields, debt levels and price-to-book ratios.

(Editing by Nick Zieminski and Andre Grenon)