On Tuesday, Morgan Stanley adjusted its stance on Adecoagro S.A. (NYSE:AGRO), a number one agribusiness firm, by downgrading its inventory score from Obese to Equal-weight. Alongside the score change, the agency additionally revised its value goal for Adecoagro’s shares, decreasing it to $12.50 from the earlier $14.50.
The downgrade was based mostly on a reassessment of the corporate’s monetary outlook in gentle of decrease sugar costs. Regardless of the downgrade, Morgan Stanley expressed a continued desire for Adecoagro over São Martinho S.A. (SMTO), which the agency downgraded to Underweight, citing Adecoagro’s larger Free Money Circulation (FCF) yields as a deciding issue.
Morgan Stanley’s evaluation projected that Adecoagro’s FCF yield would vary between 8.6% and 14.2%, considerably extra favorable than São Martinho’s estimated FCF yield of 4.0% to five.7%. This evaluation thought-about each firms’ hedging positions and a situation the place sugar costs fall to $19 and $18 per pound.
The agency’s revised value goal and inventory score mirror a cautious outlook for Adecoagro, factoring within the anticipated impression of the sugar market dynamics on the corporate’s monetary efficiency. Morgan Stanley famous that their estimates stay under the consensus, suggesting a extra conservative view of the corporate’s future earnings potential.
This text was generated with the assist of AI and reviewed by an editor. For extra info see our T&C.
