Espadrilles – Alpargatas shares are down nearly 16% in the early followingnoon following yet another weak quarter, with numbers considerably below consensus.
Earnings per share came in at R$0.12, down 54% year-on-year, while JP Morgan expected R$0.27.
“In the Brazilian operation, Alpargatas faced another quarter of falling volumes, mainly impacted by the poor performance of supermarkets, which corroborates our thesis of a saturated domestic market,” wrote Bradesco. “The international markets were negatively impacted by the US, due to changes in its channel mix strategy, affecting volumes and prices.”
Despite the poor result, JP Morgan said it continues to see the company moving in the right direction to adjust its international operations and extract better results in the medium term.
“This, added to a healthier-than-expected brand in Brazil, even in the face of a weak fourth quarter, corroborates our constructive view on the company for the medium term,” wrote the analysts.
JP also said that, with a multiple of 10x this year’s profit, Alpargatas remains a ‘buy’.
Safe harbor – Porto Seguro shares gained almost 6% today following a result that beat the market and “confirmed our expectations of a great improvement”, wrote Eduardo Rosman, at BTG.
“The pace and intensity of improvements has accelerated, and we expect more in the coming quarters due to strong increases in auto insurance prices and lower used car price inflation,” says the bank.
For Rosman, the results of the other subsidiaries also surprised on the upside, and the difference to market estimates would have been “even greater were it not for the below-average financial results.”
Moved – Citi downgraded its recommendation for Movida from ‘buy’ to ‘neutral’ and cut its share price target in half, from R$15 to R$7.25. The bank said the company remains well positioned in the ‘rent a car’ (RAC) market because it has a newer fleet — which may allow for higher rates and much lower renewal risks compared to its biggest competitors.
“However, the risks of a decline in daily RAC rates appear to be intensifying as a result of weaker economic activity and a less premium in this year’s fleet,” wrote Citi.
For the bank, the normalization of used car segment margins to pre-pandemic levels is happening faster than expected — and all these factors added together might lead to pressure on Movida’s cash generation.
Vale and Gerdau – JP Morgan gave a downgrade at Vale and Gerdau, citing the relevant rises that the two stocks had in recent months (Vale rose 40% and Gerdau 35%).
“We believe there will be better entry points into these stocks in 2023 as China’s reopening starts to be a driver more relevant to commodities,” the analysts wrote.
JP lowered its target for Vale to R$93 and Gerdau’s to R$32.5. The bank said that its order of preference in the sector is Ternium, CSN, Vale, Gerdau and Usiminas.
At Vale, the bank thinks Q1 results and potential dividend announcements might boost the stock in the short term. “But in the medium term, we think iron ore momentum should take the pilot’s seat,” analysts wrote, predicting a correction in prices.
Gerdau drops 1.15%; to Vale, 1.3%.
Azul – Santander applauded Azul’s preliminary data for the month of January.
Consolidated passenger traffic (RPKs) increased 21.3% to 3.3 million, while capacity (ASK) rose 23.5% to 4 million. This resulted in a load factor of 82.3%, down 1.5 percentage points year-on-year.
The bank saw the numbers as positive “given the gradual recovery of international demand, combined with a consistent recovery in the domestic market, despite the generalized worsening of the total occupancy rate.”
Azul horses 2.8%.
