On Tuesday, Morgan Stanley (NYSE:MS) resumed coverage on Naturgy Energy Group (NTGY:SM) (OTC: GASNY) stock, assigning an Equalweight rating with a price target set at EUR24.00. The firm highlighted improving fundamentals in the company and anticipated earnings per share (EPS) upgrades.
Despite these positive factors, Morgan Stanley pointed to Naturgy's lower liquidity compared to its peers and limited fundamental upside as reasons for not assigning a higher rating.
The new price target suggests that Morgan Stanley sees potential for the stock's value, although the firm has not indicated a strong conviction for significant growth beyond the current level. The Equalweight rating reflects a neutral view of the stock's future performance in relation to the sector.
The analyst's comments underscore the balance between Naturgy's positive attributes, such as its improved fundamentals, and the factors that temper the firm's outlook, including the stock's liquidity relative to its peers. The analyst believes that while there is room for EPS growth, the current valuation does not demand a more aggressive investment stance.
Naturgy's stock performance will be watched closely by investors to see if the anticipated EPS upgrades materialize and whether the company can address the concerns about liquidity and fundamental upside mentioned by Morgan Stanley. For now, the firm maintains a stance that is neither particularly bullish nor bearish.
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