On Wednesday, Morgan Stanley (NYSE:MS) adjusted its stance on Scor SE (SCR:FP) (OTC: SCRYY), downgrading the stock from Overweight to Equalweight and reducing its price target to €25.00 from the previous €36.00.
The revision reflects a more cautious outlook due to revised earnings expectations for 2025 and an anticipated increase in the cost of equity, which is linked to uncertainties in future earnings.
The decision to move to an Equalweight rating from Overweight was informed by the stock's previous valuation relative to its peers, alongside the expectation that resolving capital issues and stabilizing earnings would lead to a higher valuation. However, the new price target considers the potential for lower earnings than anticipated in 2025.
Morgan Stanley highlighted that while Scor SE shares are trading at a lower price, approximately 4 times the projected 2025 earnings, the firm has decided to remain on the sidelines. The lack of clarity on the company's future earnings is the primary reason for this more reserved position.
The firm indicated that its perspective on Scor SE shares could shift if future earnings become more predictable. Until then, the updated price target and rating reflect a tempered view of the company's financial prospects.
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