(Image: REUTERS/Amanda Perobelli)
O Bank of America lowered its target price for shares of Cosan (CSAN3) from R$23 to R$20, but still reinforces the purchase, projecting a potential increase of 50%.
Despite the cut, analysts continue to view the company as solid holding long-term and highlights initiatives to:
- streamline operations of underlying assets, reduce exposure to Vale (ELECTION 3) when undoing the collar structure;
- improve interest coverage and unlock the value of subsidiaries.
According to the bank, the 16% discount for the sum of the parts represents support for the valuation.
“Over the past 15 years, Cosan has become a unique portfolio company in Brazil, with irreplaceable energy and infrastructure assets. Between 2009 and September 2022, the strategy rewarded shareholders with an average annual return of 18% vs. the Ibovespa +8%.
However, say Isabella Simonato and Julia Zaniolo, the story changed after the acquisition of a minority stake in Vale in Oct/22.
Since then, the stock has fallen 10% a year and some investors now view Cosan as a leveraged holding company with no near-term catalysts.
CSAN3: BTG cuts target price due to adjustments in Raízen (RAIZ4), but still sees the stock soaring
On Wednesday (18), the BTG Pactual revised its estimates for Cosan, amid the weak performance of the shares of Vale (ELECTION 3) — a company that has a 4.14% stake, the results were slightly weaker than expected from Raízen (RAIZ4) and a less favorable interest rate environment.
Analysts revised their estimates and reduced their proforma EBITDA projections for 2024 and 2025, with net income also being revised downwards due to higher interest rates and a still-leveraged balance sheet.
Despite reducing the target price from R$30 to R$23, mainly due to adjustments at Raízen, analysts still recommend buying and predict a potential appreciation of 72% in the next 12 months.