UPDATE: Morgan Stanley Initiates Coverage on YFA SA

In a report published Monday, Morgan Stanley analyst Bruno Montanari initiated coverage on YFA SA (NYSE: YPF) with Overweight and a $50.00 price target.

According to the report, a better than 2:1 bull:bear skew on YPF is seen, but the analysts call is geared to investors with a LT horizon. Renewed access to capital markets should allow YPF to develop its sizable shale resources, reversing five years of declining output.

The report noted three drivers leading to the Overweight rating:

-Access to external funding & technology -Resolution of expropriation overhang -Development of sizeable shale oil/gas plays

“YPF trades at a ~50% discount to global oil companies exposed to shale plays, mostly in the US,” the report said. “We find its multiple attractive for a LT investment opportunity.”

Some risks to YPF included lack of access to further funding options, lowering NAVs and expropriation overhang persisting through multi-year arbitration and lawsuits.

YPF closed Friday at $32.65 with share trading up at 1.02 percent.