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LATAM Airlines No Longer Underweight At Morgan Stanley

Morgan Stanley upgraded LATAM Airlines Group SA (ADR) LFL 3.99% to Equal Weight from Underweight to reflect expectations of further strides in rationalizing its business.

"We project a 2016e EBIT margin for LATAM of 6.0% (closer to the high end than the low end of its guided range) and see moderate profitability gains for the company next year, helped by a better macro, a stronger BRL and the company's cost initiatives," analyst Josh Milberg wrote in a note.

Milberg also increased his price target to $8.80 from $4.90, reflecting Qatar Airways capital injection and the expectations that the airline will deliver an additional $1.5 billion of fleet commitment/asset reductions beyond its earlier achievements.

"However, with the stock trading at a 2017e EV/EBITDAR of 7x, we believe an Equal-weight is warranted for the stock," Milberg added.

At time of writing, ADRs of LATAM Airlines were up 0.87 percent to $8.07.

Sep 2016Morgan StanleyUpgradesUnderweightEqual-weight
Aug 2016CitigroupDowngradesBuyNeutral
Jul 2016Deutsche BankUpgradesHoldBuy

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