(Image: Pixabay/ athree23)
BTG Pactual said this week that the Renner (LRNN3) is one of the retail stocks closest to unanimous agreement among local investors, in a clear change compared to a few months ago, given the company's improvement and “decent” valuation.
The bank highlighted that the sector is highly correlated with the macro outlook, as well as stock performance, and said it sees hows best choices in the industry the roles of Free Market (MELI34), Vivara (VIVA3), Renner (LREN3), Mateus Group (GMAT3) e Smartfit (SMFT3).
BTG says investors have adopted light exposure to retail sector stocks and demonstrated concerns about the effects of higher interest rates on consumption and profits.
“While investors agree that fundamentals are gradually improving, after two quarters of decent sales growth and margin expansion, there is still limited room for upward revisions (with a few notable exceptions) in corporate earnings estimates.”
Cheap paper has not been enough to invest in most national names, says BTG.
The bank says renewed optimism about the Brazilian economy could be “tempered” by higher-than-expected inflation and higher interest rates.
What else do investors look at
Free Market (MELI34) is well-regarded by investors, analysts said, albeit with some positions reduced after the recent rally, with the stock up 33% in the past three months.
BTG said investors have doubts about the potential synergies of the Azzas 2154 (AZZA3) in the coming quarters, remaining in “standby mode”.
Vivara (VIVA3) is another consensus, with investors taking a more optimistic stance after the second quarter and with the company's stronger operational momentum, he said.
According to BTG, local investors have a more negative bias towards food retailers Assaí (ASAI3) e Carrefour (CRFB3) based on weak growth prospects and companies' financial leverage.