On Tuesday, Morgan Stanley resumed coverage on Oatly Group AB (NASDAQ:OTLY), the plant-based milk company, assigning an Equalweight rating and setting a price target of $1.25. The firm highlighted a cautious stance due to limited visibility regarding the company's revenue growth and timeline to EBITDA profitability.
The analyst pointed out the challenges in predicting Oatly's top-line growth, as well as uncertainties surrounding the company's path to EBITDA profitability. These concerns are contrasted with the potential for strong long-term revenue growth within the oat milk category, where Oatly is expected to continue gaining market share.
Oatly, which specializes in oat milk and other plant-based alternatives, has been navigating a competitive and rapidly evolving market. The Equalweight rating suggests that Morgan Stanley views the company's stock as holding a risk-reward balance that is in line with the broader equity market.
The $1.25 price target reflects Morgan Stanley's assessment of Oatly's value, taking into account both the current challenges and the opportunities that lie ahead for the company in the expanding market for plant-based dairy alternatives.
The resumption of coverage by Morgan Stanley provides investors with a renewed perspective on Oatly's financial outlook, as the company strives to capitalize on the growth of the oat milk sector and improve its financial performance.
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