In a recently published report, the bank reassessed Cosan's (CSAN3) thesis and pointed out what is at stake for the company now
A Cosan (CSAN3) is not experiencing its best moment on the stock market. This year, the company's shares have already plummeted 35%.
In this scenario, many investors' doubts are whether the asset's decline is a warning sign or buying opportunity.
Recently, the BTG Pactual revisited the company's thesis in a free report and revealed what to do with the holding company's shares.
What is bringing down Cosan (CSAN3) shares?
In BTG Pactual's view, Cosan shares have become more difficult to negotiate for two reasons: “increasing complexity and group leverage”.
One of the main factors that contributed to this worsening was the purchase of 4.9% stake in Vale em 2022.
At the time, the business was already seen as countercyclical, especially due to the challenges the mining company was facing. The holding company's expectation was to be able to collaborate with shareholders to increase efficiency and unlock value within the company.
But, according to BTG Pactual, Cosan failed in this regard and “this cooperation with governance ended up becoming an area of concern”.
They further add that, “from a financial point of view, returns have been mediocre”. According to BTG Pactual estimates, considering the opportunity cost of Cosan's investment, to date, the holding company has had a “'economic loss' of approximately R$3.1 billion” with Vale.
And despite the good dividendsthe mining company's cash consumption with problems related to Samarco and Brumadinho, as well as the outlook for iron ore prices will probably make future payments difficult.
In this sense, the investment bank decided to review the estimates for Cosan (CSAN3) and reduced projections of EBITDA and net income. He pointed out that, given the rise in interest rates, issues with Vale and high leverage may have an even greater impact on results.
On the other hand, although BTG believes that Cosan is under pressure, which makes investing in the holding company more challenging, there are still positive points in the company's thesis.
Is the market underestimating Cosan (CSAN3)?
BTG Pactual pointed out that the company went through an extensive debt renegotiation process and significant amortization should take place in 2027.
Furthermore, Cosan has some business opportunities that can bring good returns, such as, for example, sale of assets and possible IPOs.
In this sense, despite projecting lower returns for the holding company in 2024 and 2025, the investment bank believes that the market continues “underestimating the company's ability to reinvent itself and thrive amid challenging conditions.”
Therefore, in addition to the result estimates, BTG Pactual also reassessed the target price of the company's shares and, in a report published on September 18, analysts say in no uncertain terms whether it is time to buy or sell Cosan (CSAN3).
And you can have access to the complete material in a free. The largest investment bank in Latin America has released a report as a courtesy, revealing what to do with Cosan shares.
To access it, simply click the button below and follow the instructions. Don't worry, the report is free and you will never have to pay to access it:
This material is not related to specific investment objectives, financial situation or particular needs of any specific recipient, and should not serve as the sole source of information in the investor's decision-making process. Before making a decision, the investor should carry out, preferably with the help of a duly qualified professional, a thorough assessment of the product and its risks in light of their personal objectives and risk tolerance (suitability).