MS downgrades Tietoevry, says demonstrating portfolio strength will take time

** Morgan Stanley downgrades Tietoevry TIETO to "equal weight" from "overweight" and cuts PT by 5.5% to 21.5 euros, saying that demonstrating the strength of the Finnish IT services firm's portfolio will take time

** The broker says the sale of the company's Tech Services business is "a major step towards a higher-growth, higher-margin Tietoevry", clearing a material overhang on the stock

** However, it will take time to see the benefits, with the deal due to be completed in Q3 and the highly uncertain underlying IT demand environment, MS says

** It adds Tietoevry's valuation discount to peers looks less compelling and it does not see a clear near-term catalyst to solidify investor confidence

** Out of 15 analysts covering Tietoevry, four rate the stock "strong buy" or "buy", eight "hold" and three "strong sell" or "sell"