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