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On Thursday, Morgan Stanley raised its rating on stock of YPF S.A. (NYSE: YPF), shifting from Underweight to Equalweight. Accompanying this upgrade is a substantial increase in the price target, moving to $22.00 from the previous $10.50.
The adjustment by Morgan Stanley reflects a positive shift in perspective regarding Argentina’s economic situation. The firm cites progress in macroeconomic stabilization and a positive forecast from their economics team as key reasons for the revision.
As a result, the discount rate assumptions for Argentina have been lowered, reducing the risk premium associated with the country’s assets when compared to other Latin American markets.
Despite the upgrade, Morgan Stanley maintains a cautionary stance, noting that the risk premium for Argentina remains approximately 250 basis points higher than that of other Latin American countries. This indicates that while the outlook has improved, there are still inherent risks compared to regional peers.
The revised discount rate has had a significant impact on Morgan Stanley’s price targets for Argentine assets, with YPF S.A. experiencing a notable upward revision. The new price target of $22.00 per ADR represents more than a doubling from the previous target of $10.50, signaling increased confidence in the company’s valuation.
Morgan Stanley’s upgrade of YPF S.A. comes amid a broader reassessment of Argentine assets, as economic indicators suggest a more stable environment for investment. The firm’s analysis leads to a more balanced view of YPF’s stock, aligning it with the average ratings of other companies covered in the region.
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