UPDATE 1-RESEARCH ALERT-Morgan Stanley upgrades UBS

(Adds details, share price)

April 8 (Reuters) - Morgan Stanley upgraded Swiss bank UBS AG UBSN.VX to "equal-weight" from "underweight" and raised its price target on the stock, saying much of the bad news that the investment bank had been concerned regarding the stock is now on the table.

The investment bank, which removed UBS from its model portfolio as a least preferred stock, said through the management change at the company, the group is starting a new chapter “with gritty realism about the challenges ahead.”

“If there are no further major writedowns, and management executes well, then despite the risks we no longer see a significant Underweight versus the wider banks sector,” Morgan Stanley said in a note to clients.

With additional write-downs of $19 billion on its U.S. real estate and related assets causing a net loss of 12 billion Swiss francs ($12.03 billion) in the first quarter, UBS leads the global list of those hit hardest by the credit crisis.

Morgan Stanley said it viewed the markdowns announced by UBS as helpful to clear the air, adding that the Swiss banking regulator viewed the markdowns as “aggressive.”

The investment bank raised its price target on the stock to 34 Swiss francs from 28 Swiss francs.

For 2009, Morgan Stanley expects about four-fifths of the bank’s earnings to come from credit light, cash generative wealth and asset management business and Swiss business.

“UBS’s wealth management, despite losing assets and weaker margins, still has a leading franchise and strong earnings power,” the investment bank said.

Shares of the Zurich, Switzerland-based company were up about 1.2 percent at 35.84 Swiss francs at 1004 GMT. (Reporting by Ramya Dilip in Bangalore; Editing by Amitha Rajan)