BUZZ-Rolls-Royce: MS upgrades on improving cash flow quality

** Morgan Stanley raises Britain's Rolls-Royce Holdings to "overweight" seeing scope to narrow valuation discount to closest peers

** MS expects Rolls-Royce to show stronger cash flow growth beyond 2020 than peers driven by restructuring efforts and share gain in the widebody installed base

** Says its fundamental argument is that RR is replacing lower quality cashflow with higher quality cashflow and views this as a stable, and growing, component of cash flow, which it expect to be more highly valued than recent working capital improvements

** Says improved visibility on RR's Trent 1000 engines costs, demonstrably increasing rigour on investments and progress on restructuring have increased its confidence in its mid-term FCF estimates

** MS raises target price to 1100p what implies 22.5 pct upside from last closing price (Reporting By Geetha Panchaksharam)