BRF shares (BRFS3) The highlight was Ibovespa’s decline this Tuesday (25) with a more cautious view of analysts regarding the company’s third quarter and also with caution about the company’s prospects after the leadership change. The assets of the owner of the two companies Sadia and Perdigão decreased by 11.24% to R$12.24; The day before, the assets had already fallen 7.70%.
Citi analysts lowered BRF’s buy recommendation to “neutral/high risk”, while the target price was lowered from R$29 to R$18, still a 30.5% upside potential compared to the previous day’s close. Analysts indicated that profitability will resume after the change in leadership. For Citi, the company must focus on restoring profitability and reducing excess inventories.
It should be noted that in August, L’Oréval Luz resigned as CEO of the company, and was replaced by Miguel Goularte, who served as CEO of Marfrig Global Foods (MRFG3).
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Citi raised Marfrig’s recommendation from Equivalent to Neutral to buy, even as the target price was lowered from R$26 to R$17. The stock closed with a slight increase of 0.45% at R$11.24, after advancing 4.92% previously at R$11.74.
They note that Marfrig controls BRF at the board level, even with a 33% stake share.your sleep. In addition, it highlights Marfrig’s good position in North America and the positive outlook for South America, considering the demand for beef in Brazil.
In addition to Citi, JPMorgan lowered its target price for BRF shares, from R$16.50 to R$15 (up 9%), expecting weak data for the third quarter, with discouraging trends on prices for processed foods in Brazil. The company releases its results on November 9, after the market closes.
“We believe that business in Brazil should show a slight improvement due to the unstable economic recovery, market oversupply and lower domestic prices,” says the analysis team led by Lucas Ferreira.
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The drop in corn costs should not be noticed this quarter, perhaps only towards the end of the last quarter of the year, analysts point out.
The weak dynamics in Brazil are not likely to be offset by international operations, as better export prices to Asia are likely to be offset by the normalization of halal spreads, which were higher in the second quarter.
The estimate is for EBITDA of R$1.316 billion in the third quarter, reducing Ebitda’s estimate for the year and in 2023 by 11%. For 2023, they now expect Ebitda to be worth R$5.486 billion, compared to a previous forecast of R$6.190 billion.
JP recently, on September 27, updated the stock’s recommendation to “neutral,” noting that the risk/reward ratio looks interesting. They noted that “the speed of the local market recovery is disappointing, which prompted us to adopt more conservative estimates for the fourth quarter and 2023.”
Thus, analysts point out, before becoming more optimistic, they expect a more stable recovery in business results in Brazil and signs of a new strategy for the recovery in free cash flow (FCF).
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