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Investing.com - Morgan Stanley (NYSE:MS) downgraded Ternium S.A. (NYSE:TX) from Overweight to Equalweight on Monday, setting a price target of $34.00. The steel manufacturer, currently valued at approximately $6 billion, offers an attractive dividend yield of 11.86% and maintains a GOOD financial health score according to InvestingPro data.
The investment bank cited limited upside potential to its price target as the primary reason for the rating change, noting that while the stock’s risk-reward profile remains positively skewed, it is only modestly so.
Morgan Stanley indicated it does not see any concrete tailwinds for Ternium in the coming months, despite acknowledging that the company maintains a strong balance sheet.
The firm pointed out that Ternium’s financial position has deteriorated somewhat following a higher capital expenditure revision.
While Morgan Stanley expressed confidence that Ternium will successfully turn around operations at Usiminas (OTC:USNZY) and extract value from the asset, it cautioned that elevated steel imports into Brazil would likely keep prices under pressure, limiting the company’s profitability.
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