Morgan Stanley adjusted its stance on LatAm Airlines Group by moving the stock from Overweight to Equalweight and increasing its target price to $67 from $56. The change, communicated by analyst Jens Spiess, reflects a shift toward profit-taking after a period of pronounced share-price appreciation.
Spiess attributed the decision to LatAm's recent market performance. According to the analyst, the shares have returned 85% over the past year and have climbed 31% in the last six months. Those gains prompted Morgan Stanley to view the security as offering a more balanced risk-reward profile now that the market has re-rated the company.
The bank noted that earnings expectations for the airline have improved, and that the stock's valuation appears fair following its re-rating. At the time of the note, the shares traded at a price-to-earnings ratio of 11.77. The raised price target to $67 per American Depositary Share accompanied the downgrade in the analyst rating.
LatAm Airlines Group, which operates as a major carrier in Latin America, lists its American Depositary Shares on the New York Stock Exchange under the ticker LTM.
Recent company results underscore the stronger operating picture. LATAM reported fourth-quarter 2025 earnings per share of $1.69, ahead of the $1.26 forecast - a 34.13% surprise relative to expectations. Total revenues for the quarter were nearly $4 billion, representing a 16.3% increase year-over-year.
At the same time, other sell-side institutions have adjusted their views. Goldman Sachs downgraded LATAM from Buy to Neutral and reduced its price target to $64.10 from $66.20, citing limited upside after the stock's strong performance since October 2024.
The juxtaposition of upgraded earnings expectations, solid quarterly results and analyst downgrades illustrates a market in which fundamental improvements have been at least partially priced into the shares. Morgan Stanley's move captures the tension between positive operating results and a tighter valuation framework following significant share appreciation.
Key points
- Morgan Stanley downgraded LatAm Airlines Group to Equalweight from Overweight and raised the price target to $67 from $56.
- Shares have surged 85% over the past year and 31% in the last six months, prompting profit-taking and a reassessment of risk versus reward.
- LATAM posted Q4 2025 EPS of $1.69 versus a $1.26 forecast and nearly $4 billion in revenue, up 16.3% year-over-year; Goldman Sachs also downgraded the stock to Neutral and trimmed its price target.
Risks and uncertainties
- Valuation risk - The stock's substantial recent appreciation has narrowed potential upside and led analysts to conclude the shares now trade at a fair valuation, affecting investor returns and market positioning in the airline sector.
- Analyst sentiment shifts - Downgrades from major brokerages can influence investor demand and trading dynamics for airline equities, with implications for equity financing and market liquidity.
- Expectation sensitivity - Although LATAM beat Q4 2025 earnings estimates, future guidance or missed expectations could reverse sentiment quickly, impacting both equity and credit markets tied to the transportation sector.
This report presents the analyst actions, recent company results and valuation context as described by the respective firms and disclosed figures. It does not introduce additional forecasts or external commentary beyond those items.