Jefferies Financial Group (JEF), Houlihan Lokey (HLI), and Moelis (MC) are all set to benefit from an expected pickup in sponsor activity in the coming year, Morgan Stanley analysts said in a Monday note.

Sponsor activity is expected to rebound faster than the market expects in 2026, as historically, capital markets activity tends to move together with corporate activity, sponsor activity, IPOs, and debt issuance cycles.

The analysts upgraded Jefferies to overweight from equalweight and increased its price target to $78 from $74. They noted that the recent stock pullback following developments with First Brands was "significantly overdone," and that they expect further share gains and an expanded SMBC partnership.

Morgan Stanley downgraded Evercore (EVR) to equalweight from overweight as the stock has significantly outperformed in 2025 year-to-date. Analysts have a $373 price target on the stock.

The analysts said, however, that they expect re-rating higher at Evercore, driven by improved antitrust clarity, strength in its private capital advisory revenues, and further market share gains.

Price: 334.90, Change: +3.21, Percent Change: +0.97