BBI lowers ratings for Suzano (SUZB3) and Klabin (KLBN11), Locaweb (LWSA3) credit cuts, JP raises malls and more recommendations

BBI lowers ratings for Suzano (SUZB3) and Klabin (KLBN11), Locaweb (LWSA3) credit cuts, JP raises malls and more recommendations

After the earnings season and with the continuation of the high volatility scenario for commodities, market analysts have revised their estimates for stocks in various sectors.

In recent days, several changes in recommendations have gained importance. Bradesco BBI lowered its recommendation for pulp and paper stocks, while JPMorgan raised it for malls, focusing on lower Selic. On the other hand, Credit Suisse lowered recommendations for growth-related stocks.

Bradesco BBI pulls back on Suzano (SUZB3) and Klabin (KLBN11)

Bradesco BBI lowered its recommendations for major Brazilian pulp and paper stocks. Analysts noted that it was a tough year for pulp and paper stocks in Latin America, which surprisingly underperformed other commodities.

The bank believes that sector stocks are unlikely to do well in an environment of falling pulp and paper prices. Analysts anticipate a downside scenario for commodities in this sector amid weak supply and demand fundamentals.

Additionally, analysts note, investors have also rewarded higher dividend payers, which the industry generally lacks.

Thus, BBI lowered Suzano’s rating from Outperform (equivalent to purchase) until poor performance (Sales equivalent) and reduced the target price from R$80 to R$56, implying a potential increase of 13.1% over Tuesday’s closing price of R$49.51.

The bank also lowered its recommendation for Klabin from outperform to neutral, with the target price raised from R$37 to R$27, which is a 31% increase in relation to Tuesday’s closing price of R$20.61.

Klabin is now BBI’s preferred name among sector assets, due to its flexibility of results and low direct exposure to core prices. Analysts say the company is also ramping up growth projects in 2023, which should contribute to cash generation and earnings dynamics.

Finally, Klabin also offers higher dividend yields than its peers, around 6 to 7% in
2023 and 2024,” they point out.

For Susanoo, while they continue to see good long-term value, they believe the stock will likely perform poorly in the next six to twelve months.

Looking at the macro scenario, BBI analysts indicate that pulp prices will begin to decline soon and expect supply to increase by 1.1 million tons in 2023 and 2.1 million tons in 2023.

“We were less concerned about the 2023 pulp market dynamics, even in a high-supply environment, as we were more positive about European and Chinese demand. However, we are now integrating a more challenging macro environment in Europe, while Chinese demand remains murky and can only be supported by During some resupply.”

However, they included a $250 per ton drop in the hardwood pulp price in their model by the end of 2023 (to $610 per ton next year and an average of $690 per ton) and an additional $110 per ton drop in their model. 2024 (up to 500 USD per ton in 2024 with an average of 540 USD).

Locaweb Credit Rating Downgrade (LWSA3)

Credit Suisse raised its target price for Locaweb from R$9.50 to R$11, up 6% from Tuesday’s closing price (23) from R$10.36, following strong revenue growth in the second quarter. However, the Swiss bank lowered the stock’s rating from outperformer to neutral for evaluative reasons after the shares rose 79% in the past 30 days.

Credit Suisse’s research team maintains a very positive structural view of the company’s prospects. However, it is estimated that the current share price is extended.

Analysts raised their estimates for 2022 revenue by 2% and 2023 by 4%, while maintaining their gross merchandise sales (GMV) assumptions.

The higher revenue comes from very strong growth in Bling (ERP), Better Shipping (Logistics) and Vindi (Payments) as well as a positive Squid reading in the quarter. Analysts see it as a positive factor is the fact that the company is not only dependent on the growth of e-commerce, but also other factors.

Additionally, we were amazed at the 10% growth of the Locaweb e-commerce platform when the overall market fell by 4%, solidifying our view of a very competitive product on the part of Locaweb. Margins should return to the 20% level, but it should take a few years. The synergy between recent mergers and acquisitions should take 3 years,” he says.

JPMorgan raises brMalls (BRML3) and Iguatemi (IGTI11)

In a report, JPMorgan highlights that it still sees Selic as the next big catalyst for the shopping mall sector and believes that more and more investors will start pricing in lower interest rates in the sector as the expected easing cycle approaches. . In the second quarter of 2023.

According to analysts, lower rates will benefit the industry in two ways: (1) assuming real prices can return to January 2020 levels, the industry can trade back at multiples of about 22 times price (P) on operating cash flow (FFO), or P/FFO, which is a high (probability of estimate) of 75% over current multiples of about 12.5 times; and (ii) a 0.5 point decrease in the Selic rate could increase the FFO for 2023 between 1.5% and 3%. Additionally, the bank states that malls have between 75% and 87% of their debt tied to floating rates, with IGTI being the most exposed.

JPMorgan has updated its recommendations for Iguatemi (IGTI11) taking into account a evaluation Attractive, stocks are trading at a discount of 15%, underperformance of assets this year, and upward “risk” in earnings expectations due to increased exposure to negative writedowns. Iguatemi is the second company in this segment in the ranking of preference from JPMorgan, after only Multiplan (MULT3). The target price for IGTI11 units is R$27.00, up 32% compared to the previous day’s close.

For brMalls, in light of the company’s shareholders and Aliance Sonae (ALSO3) agreeing to the merger on June 8, analysts at the bank are incorporating the terms of the agreement into their December 2023 target price. Target R went from $11.50 to R$12.50, which is an increase by 44.3% in relation to the closing price on Tuesday (24) at R$8.66.

The bank’s analysis team assumes a share exchange ratio of 0.39857 also share per BRML3 share and a cash payment of BRL 1.51 per BRML3 share adjusted by Selic.

In addition, analysts note that “brMalls is currently trading at a 2.0% discount from the incorporation price of R$8.83 at the last close (August 23), making it more attractive to buyers. Shareholders are managing the transaction through BRML3 rather than ALSO3.”

Credit Raises Ambev Target Price (ABEV3)

Credit Suisse raised its target price for ABEV3 stock from R$16.50 to R$18, a potential increase of 16.6% over the previous day’s close and maintaining the recommendation. Outperform. The target increase occurred to incorporate better-than-expected results in the first half of the year, increasing Ebitda’s forecast and earnings per share for 2022/2023 by 9% and 16%, respectively.

“The paper was used to trade at a premium of about 20% to the basket High quality, but is now trading at a discount of about 32%. Furthermore, strong revenue dynamics combined with more favorable cost forecasts in 2023 support a more positive outlook, especially for investors with a shorter investment horizon. Credit sees the stock trading 30% below its historical average and therefore reiterates its superior recommendation given the unexplained inconsistency between strong fundamentals and discounted valuation.

The credit highlights the company’s excellent execution and fundamental mindset, while the perception is that investors are looking at the glass “half empty,” with an eye on margin pressure. “While we agree that it is important to restore margins, we also recognize that Ambev is undergoing a digital and cultural transformation, and therefore the new level of sustainable margins must be structurally different than it was in the past. However, we believe it is a matter of time before margins and ROIC [retorno sobre o capital investido] Recover ”, evaluating analysts.

BBA resumes coverage of capital goods; Marcopolo (POMO4) is the best

Itaú BBA resumed coverage of capital goods with a positive outlook for the sector, based on profit improvement momentum (gradual normalization of the supply chain, primarily semiconductors, easing production bottlenecks; falling commodity prices, favoring margins) and valuation decline (the sector is near its lowest level in nearly a year). From a decade in terms of EV/Ebitda, or constant value on Ebitda), which together translate into attractive asymmetry for some stocks.

Analysts explain that “Capital goods stocks have suffered compared to Ibovespa in the past 12 months due to the increase in the cost of capital, increased risk perception from semiconductor shortages and the global economic slowdown.”

The bank has a recommendation Outperform Marcopolo (POMO4) has a target price of R$3.40 per share, Fras-le (FRAS3) with a target price of R$16 per share and Tegma (TGMA3) with a target price of R$22 per share. recommendation market performance (Performance in line with market average, neutral equivalent) for Randon (RAPT4), with a target price of R$12 per share, Tupy (TUPY3) with a target price of R$31.50 and Iochpe Maxion (MYPK3) with a target price of R$12. 18 Brazilian riyals per share.

Marcopolo is the best choice in the sector by BBA. “Improved demand and a more interesting mix have already materialized in the 2Q22 numbers for Marcopolo. In our opinion, these tailwinds are likely to continue, leading to increased operating leverage and increased profitability.” They are also optimistic at Tegma and Fras-le due to the recovery of the transported vehicles for the first and last flexible commercial model.

Dotz (DOTZ3): credit rating downgrade, with 86% target rate cut

The day before, Credit Suisse lowered the recommendation for Dotz stock from Outperform to neutral and lower the target price from BRL 22 to BRL 3 (a decrease of 86%). There was a drop in revenue estimates to 22 by 49%, while there was an increase in cost of capital from 14.5% to 18.3%.

Dotz’s thesis is based on the idea that the company will be able to expand monetization of 53 million loyal users through its marketplace and techfin platforms. In this sense, the evidence is that Dotz is heading in the right direction, with market and technology technology accounting for 20% of total revenue in Q222 (versus 16% in Q221) and an increase in average revenue per user (ARPU). ).

However, despite the good results, after a year of high investment since the IPO, analysts expected the new sectors to gain strength at a faster pace than has been seen.

The credit also highlights that the company’s R$350 million market capitalization is only R$110 million higher than its net cash position in the second quarter.

“Dotz’s loyalty business used to be cash flow positive, and its fair value will likely more than justify Dotz’s current market value. However, as Dotz uses its cash resources to develop new business, we believe its stable value may remain under pressure until Clearer signs of accelerating growth are emerging. User engagement rate appears to be the main variable of the issue,” the analysts point out.

Banco do Brasil (BBAS3): BBA . price hike target

Itaú BBA raised its target price for Banco do Brasil shares from R$44 at the end of 2022 to R$53 at the end of 2023, noting that the state-owned financial institution reported one of the strongest quarters recorded in the second quarter. Analysts don’t think it stops there.

Therefore, we have decided to increase our net income forecasts for 2022 and 2023 by 16% and 24%, respectively, resulting in a return on equity of approximately 20%. Thus, we reiterate the buy recommendation for BBAS3 ”, according to their assessment.

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#BBI #lowers #ratings #Suzano #SUZB3 #Klabin #KLBN11 #Locaweb #LWSA3 #credit #cuts #raises #malls #recommendations

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