Morgan Stanley maintains positive outlook on Equatorial

Morgan Stanley has reaffirmed its positive outlook on Equatorial (EQTL3), identifying it as one of the best opportunities in the Brazilian electric sector. Following the company’s Investor Day, analysts characterized the stock as trading at an “unjustified discount” relative to its diversified asset platform and value generation potential. The bank estimates a real internal rate of return (IRR) of approximately 13.5%.

Key growth catalysts identified include regulatory advancements and potential mergers and acquisitions (M&A). The company’s strategy is supported by a history of asset recovery and disciplined capital allocation. Additionally, ongoing operational restructurings in Rio Grande do Sul, Goiás, and Amapá are expected to contribute to margin and cash flow expansion.

Other financial institutions, including Goldman Sachs and Itaú BBA, also expressed favorable views following meetings with management. The company’s regulatory agenda over the next 12 months—covering topics such as energy loss and productivity factors—could potentially add between R$ 1.2 billion and R$ 2.3 billion to its potential EBITDA.