Morgan Stanley analysts say growth momentum for companies with exposure to the United Arab Emirates should carry into 2026, although investors should expect higher hurdles for firms to exceed forecasts after an especially strong 2025.
In a recent note, strategists Ricardo Rezende and Giuseppe Villari described the wider economic backdrop and regulatory moves as "very supportive," and called 2025 a "year to remember" for many UAE-exposed names. They added that current valuations for most stocks already reflect that upbeat outlook, even as several idiosyncratic pushes that lifted results in 2025 may be less relevant going forward.
Analysts pointed to examples of those idiosyncratic drivers, noting that seasonal ticket sales for public parking group Parkin and the addition of new gates for tolls operator Salik were among the factors that boosted results in the recent period but may not sustain the same level of impact.
Dubai's main share index has advanced so far this year, underpinned by optimism ahead of the coming fourth-quarter earnings season. Against that backdrop, Morgan Stanley altered several ratings and outlooks across its UAE coverage.
The bank upgraded Dubai Taxi from "equal-weight" to "overweight," saying the company is well placed to outperform peers. The analysts cited easing concerns around the group's partnership with ride-hailing firm Bolt as one facilitating factor. They also expect the pace of expansion into other Emirates to pick up this year, alongside the pilot testing of autonomous taxis in Dubai.
On the subject of autonomous vehicles, the strategists said that while the technology is not a material value driver in the short or even medium term, it is likely to figure more prominently in investor conversations. They highlighted the trade-off investors will consider between higher capital expenditure compared with a standard taxi and the potential for lower operating expenses.
Morgan Stanley also placed ADNOC Distribution and Empower on an "overweight" list, arguing both companies are trading at a "significant discount to historical levels." The analysts described ADNOC Distribution as the state-owned oil company of Abu Dhabi and Empower as a cooling services provider, and said the market appears to be underpricing their prospects.
By contrast, Salik was downgraded to "equal-weight." The analysts expect Salik's business to normalize this year after traffic growth, the activation of two new gates and dynamic pricing lifted results in 2025. The note included a cautionary line on upside potential, saying, "[I]f new gates have to be incorporated for there to be decent upside on Salik, it's time to become more cautious."
What this means
- Investor optimism is supporting UAE equities, but many companies now face tougher expectations after strong 2025 performance.
- Transport and mobility names, energy distribution and utilities are in focus as analysts adjust ratings based on evolving, and sometimes fading, one-off drivers.