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Investing.com - Morgan Stanley (NYSE:MS) initiated coverage on Azzas 2154 SA (AZZA3:BZ) with an Overweight rating and a price target of R$56.00 on Wednesday.
The investment bank sees underappreciated earnings potential for Azzas, with its adjusted EBITDA estimates 4% above consensus for 2026 and 6% higher for 2027, while the stock trades at approximately 8x 2026 P/E ratio.
Morgan Stanley believes the market remains overly conservative on the combined operations following the 2024 merger of Arezzo & Co and Grupo Soma, which created Azzas 2154, the largest fashion brand platform in Latin America.
The firm attributes market caution largely to internal attrition among top management shortly after deal closure, but suggests the group structure is now better positioned, with consensus 2026 EBITDA estimates having already increased 2% since the deal’s conclusion.
Morgan Stanley expects further upside to estimates as the company begins to capture deal synergies, arguing that the current valuation indicates excessive market skepticism regarding synergy potential from the merger.
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