Morgan Stanley upgraded Prosus to Overweight from Equal-weight and lowered its price target to 51 per share from 57, implying about 29% upside from the stock's March 23 close of 40.02.
Shares of the Dutch investment group rose about 3.7% as of 08:35 ET (12:35 GMT) on the reaction to the note. At the same time, Morgan Stanley upgraded Naspers to Overweight and trimmed its price target to ZAR 112,500 from ZAR 126,000, which the bank says corresponds to roughly 27% upside from a ZAR 86,593 reference.
Holding-company discount and valuation dynamics
The firm highlighted that Prosus is trading at a sizable holding discount - the gap between the market price of the holding company and the estimated value of its underlying assets. Using analyst price targets for the underlying assets, Morgan Stanley calculated the discount at 48% relative to net asset value. If the brokerage instead uses prevailing trading values of the listed companies in Prosus's portfolio, that discount narrows to about 35%.
Morgan Stanley noted the holding discount has widened since Prosus launched an open-ended buyback in 2022, reaching the upper range of historical levels and making the current entry point potentially noteworthy to investors, according to the analysts' write-up.
The report traces the movement of the discount to events in the company 's timing: at Prosus's first-half fiscal 2026 results in November 2025, the discount to Tencent widened from roughly 15% to about 23% currently. By contrast, Prosus traded at a 7% discount to Tencent at its narrowest in July 2025.
Notably, Tencent makes up an estimated 85% of Prosus's net asset value in Morgan Stanley's framework. Following Tencent's results, Morgan Stanley's Tencent analyst Gary Yu reduced his Tencent price target by 12% to HK$650; that target still implies roughly 26% upside, the bank said. The note also records that Tencent's shares are down 15% year to date, and that Tencent invested RMB 18 billion in new AI products in 2025 with plans to more than double that investment in 2026.
Buybacks, funding and tax dynamics
Morgan Stanley estimated that since mid-January 2026, proceeds from Prosus's Tencent sell-down have funded approximately 54% of the company's share buyback programme, with existing cash balances covering the remaining 46%.
The brokerage pointed out a technical tax threshold set at 40.75 per share - the level above which a 17.6% withholding tax would apply - and noted Prosus was trading near that threshold, meaning buybacks would currently be tax-free.
On buyback sizing, Morgan Stanley said fiscal year 2026 buybacks appear to be tracking close to approximately $7 billion, above the bank's earlier assumption of $6.1 billion. For fiscal year 2027, the brokerage trimmed its buyback estimate to $5.0 billion from a prior $5.8 billion forecast.
Earnings and scenario outlook
The analysts provided diluted core headline earnings per share estimates of $4.01 for fiscal 2026, $4.64 for fiscal 2027, and $5.70 for fiscal 2028.
Morgan Stanley set a bull-case valuation for Prosus at 78 per share and a bear-case at 30. The bear-case valuation applies a 50% holding discount, which the analysts describe as the level last observed before the open-ended buyback programme began in mid-2022.
U.S. ADR coverage
Morgan Stanley also initiated coverage of the Prosus U.S. ADR with an Overweight rating and established a $12 per share price target for the ADR.
These estimates and scenario ranges form the basis for Morgan Stanley's recommendation and illustrate the bank's view that, while valuation mechanics drive a wide discount, there remains material upside from current levels according to the analysts' calculations.