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Morgan Stanley on Tuesday reinstated coverage on plant-based milk company Oatly Group AB (NASDAQ:), assigned an equal weight rating and set a $1.25 price target. The company emphasized its cautious stance due to limited visibility regarding the company's revenue growth and timeline to EBITDA profitability.
The analyst pointed to challenges in forecasting Oatly's sales growth and uncertainty surrounding the company's path to EBITDA profitability. These concerns stand in contrast to the potential for significant long-term revenue growth within the oat milk category, where Oatly is expected to continue gaining market share.
Oatly, which specializes in oat milk and other plant-based alternatives, has navigated a competitive and rapidly evolving market. An equal weight rating suggests that Morgan Stanley views the company's stock as having a balance of risk and reward consistent with the broader stock market.
The $1.25 price target reflects Morgan Stanley's assessment of Oatly's value, considering both the current challenges and opportunities ahead for the company in the expanding plant-based dairy alternative market.
The reinstatement of coverage by Morgan Stanley will provide investors with a new perspective on Oatly's financial outlook as the company looks to capitalize on the growth of its oat milk division and improve its financial performance.
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