Morgan Stanley has upgraded Ternium from equal weight to overweight, raising its price target from $55 to $65, indicating a potential upside of about 20% from the stock's recent closing price.
Analyst Carlos De Alba noted that ongoing tariff negotiations under the United States-Mexico-Canada Agreement (USMCA) could lead to reduced import tariffs on Mexican steel, which would likely increase domestic steel prices in Mexico and enhance Ternium's profitability.
Additionally, the anticipated reduction in U.S. tariffs may prompt Mexico to raise its own steel import tariffs to 50%, tightening the local market and aligning prices more closely with those in the U.S. This scenario is expected to significantly boost Ternium's profitability.
The upgrade aligns with broader market sentiment, as seven out of 16 analysts covering Ternium have a buy or strong buy rating, while six maintain a hold rating. Ternium's shares have already increased by 42% year to date, and the stock rose over 1% following the upgrade announcement