According to Morgan Stanley, the recent sell-off in Vitru stock offers an attractive entry opportunity. Morgan Stanley upgraded Vitru stock to weighting. Meanwhile, the bank’s price target of $22 means the stock is up 69.5% from Friday’s closing price. Shares were up nearly 8% in Monday trading. Shares of the Brazil-based digital education company have fallen 44% since March, according to Friday’s closing price. However, Morgan Stanley attributed the drop not to the company’s fundamentals, but to the stock’s limited liquidity “exacerbating”. “We believe this is an attractive entry opportunity and that Vitru will continue to deliver strong financial and operational performance,” wrote analyst Javier Martinez de Olcoz Cerdan in a research note. “After a major downgrade last month, reducing the gap from its peers, VTRU is the company that doesn’t need FIES to continue to deliver the best earnings drivers in the industry, as [distance learning] According to the analyst, the new Brazilian government under President Luiz Inácio Lula da Silva has spoken out about the expansion of the country’s higher education funding fund called Fundo de Financiamento ao Estudante do Ensino Superior. “Expanding FIES could be,” Martinez said, adding that its impact will depend on the size of the program, distribution rules, and how money will flow into companies. The analyst thinks other factors are that. will help Vitru continue to deliver strong results of “improved margins with trade synergies and OPEX, while generating FCF after interest expense to pay debt obligations despite high leverage ( ~4x proforma).” “Vitru is the player with the best position to capture [distance learning] opportunity,” added Martinez. —CNBC’s Michael Bloom contributed to this report.