JBS (JBS) is likely to see improving earnings momentum, a valuation angle, and free cash flow buffer despite a weak start to the year, Morgan Stanley said in a note Friday.

US Beef cycle remains challenging and Q2 industry margins appear weaker through May, but there are better signs into June and July, according to the note.

The brokerage said it cut its 2026 EBITDA forecast by 7% after Q1 miss, but softer PPC estimates are likely related to temporary headwinds, and not structural issues.

For the company's poultry producer, Morgan Stanley lowered its full-year EBITDA estimate by 9% but expects improvement in Q2 due to favorable seasonality and lower impacts from transient disruptions, according to the note.

Morgan Stanley adjusted its price target to $19 per share from $20.50, while reiterating its overweight rating on the stock.

Price: 13.62, Change: -0.37, Percent Change: -2.61