Viveo (VVEO3) Stock Rises After Acquisitions, BTG Pactual Sees Limits to Buy More Companies

Shares of Viveo (VVEO3) rose more than 4% Tuesday afternoon (23) after the company announced two additional acquisitions.

It bought Viveo Neve Indústria e Comércio de Produtos Cirúrgicos and Nutrivica Comércio de Nutrição Enteral e Parenteral for R$110 million. Their total annual income is R$122 million.

According to BTG Pactual, Viveo paid an “attractive” price to the two companies – five times the price of Ebitda (earnings before interest, taxes, depreciation and amortization) generated by both companies.

The multiplier is lower than Viveo itself, whose market capitalization is about twice the Ebitda the company should generate in 2022.

BTG Pactual asserts that the acquisitions should contribute to the growth of Viveo. Neve will boost the production and sale of items to hospitals and clinics, and Nutrivica will add the Brasilia region to Viveo’s sterile solutions portfolio, strengthening the company’s service channel.

However, the bank notes that this is the 16th merger and acquisition that Viveo has announced since the company debuted on the stock exchange in August 2021, and that this may affect the buying dynamics of other companies in the future.

Read more:
Viveo (VVEO3) buys Neve, from Surgical Industry, and Nutrivica, from Nutrition, for R$110 million

“After accelerating and achieving greater inorganic growth, the challenge is to integrate all of these assets,” BTG Pactual said in a report. “Looking forward, we point out that the extended swing could limit – but not rule out – further inorganic movement,” he added.

At around 1:15 p.m., shares of Viveo were up 4.65% to R$15.78 — much more than the stock exchange’s main index, Ibovespa, which was up 1.74%.

BTG Pactual recommends a buy the stock, with a target price of R$23. According to data from Refinitiv Available on the platform TradeMapMarket consensus is also optimistic about the paper. Of the five institutions consulted, all recommend buying the stock, and the average target price is R$24.50.

⇨ Do you want to know how to benefit from fixed income insurance? Register for this free course!