In a report published Friday, Morgan Stanley analyst Bruno Montanari maintained an Overweight rating on YPF SA YPF, with a $49.00 price target.
According to the report, YPF's sell-off reflects perceived risk from the sharp weakening of Argentina's currency. But the ARS is still within our economists' forecast, limiting downside.
“FX rate remains within our team's forecasts, leading to limited revisions to our estimates and target,” the report noted. “Our economists forecast USD/ARS at 8.20 by YE'14. At this stage, we are just marking to market our model with a faster depreciation to that level. We also assume there will be a gradual pass-through, which resulted in a 5% decline to our 2014e EBITDA. Our price target goes to US$49/ADR from US$50 previously.”
Some highlights from the report included:
-We think the 23% correction in YPF is overdone and provides an entry point.
-YPF is relatively well balanced in its FX exposure
YPF closed Thursday at $24.75 with shares trading up at 2. 65 percent.
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