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On Thursday, Morgan Stanley upgraded YPF SA (NYSE: YPF) stock from Underweight to Equal Weight. Along with this upgrade, the target price has also been significantly increased, changing him to $22.00 from the previous $10.50.
The adjustment by Morgan Stanley reflects a change in the positive outlook on Argentina's economic situation. The company cited progress in macroeconomic stabilization and the economic team's positive outlook as the main reasons for the revision.
As a result, Argentina's discount rate assumptions have been lowered, reducing the risk premium associated with the country's assets relative to other Latin American markets.
Despite the upgrade, Morgan Stanley remains cautious, noting that Argentina's risk premium is still about 250 basis points higher than other Latin American countries. This indicates that although the outlook has improved, there are still inherent risks compared to regional peers.
The discount rate revision had a significant impact on Morgan Stanley's Argentine asset price targets, with YPF SA experiencing a significant upward revision. The new price target of $22.00 per ADR is more than double the previous target of $10.50, indicating increased confidence in the company's valuation.
Morgan Stanley's upgrade of YPF SA comes amid a broader reassessment of Argentine assets as economic indicators suggest a more stable investment environment. The firm's analysis aligns YPF's stock price with the average rating of other covered companies in the region, leading to a more balanced view.
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