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Investing.com - Morgan Stanley initiated coverage on Dexco SA (BVMF:DXCO3) with an Equalweight rating and a price target of R$6.50 per share.
The price target represents approximately 22% upside potential, according to the research firm’s analysis released Monday.
Morgan Stanley cited potential tailwinds from lower interest rates ahead but expressed concern about the company’s elevated leverage and high cost of debt, which it believes will continue to weigh on free cash flow generation.
The research firm noted these factors limit Dexco’s organic de-leveraging options and constrain net income expansion, despite management’s commitment to reducing leverage through asset monetization.
Morgan Stanley has not incorporated potential asset sales into its base case due to uncertainty around timing and transaction terms, and expects leverage to remain high over the next few years.
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