Morgan Stanley defends Walter Energy (NYSE:WLT) after today's sharp loss, saying potential upside from 52-week lows is too big to ignore and that WLT can work with its banks to obtain covenant relief with sufficient liquidity (earlier). The firm thinks shares could jump 200% to $35 even if WLT announced an equity offering that increased share count by a third, which the company has not indicated it was considering. WLT +3% AH.