Ultrapar (UGPA3) has a high price, but reduced recommendation; share falls 3%

The recommendation for Ultrapar (UGPA3) shares was downgraded by Itaú BBA from purchase to neutral, according to a report published this Tuesday (2). despite the downgradeBBA increased the target price of the stock from R$29 to R$31.

As a result, the company’s shares fell by around 3%, around 1 pm, quoted at R$27.29. In the year, the stock rises 4.4%, but, in twelve months, it jumps 100%.

The changes in the analysis reflect the results released in the fourth quarter of 2023, also considering the projections (guidance, in English) presented by the company.

The structurally higher margin levels for Ipiranga were also incorporated into the model, the analysis added.

In this way, the price for the paper was raised by BBA and Ultrapar remains a high-quality name for the bank.

Surpass (UGPA3)

The analysis reinforces that Ipiranga’s recovery process was successful, Ultragaz’s results were increased and Ultracargo has a well-designed expansion strategy.

The constructive outlook for the company was confirmed by the 126% rise in shares since the resumption of coverage, according to the BBA. In this scenario, there was confidence that 2023 could mark a “turn in Ultrapar’s investment history”.

“We are confident that Ultrapar is just at the beginning of a transformation trajectory in the holding’s portfolio, which is the result of an active and focused capital allocation strategy that had as its milestone the recently announced acquisition of Hidrovias,” states BBA .

Despite this, the analysis considers that the appreciation for the share is limited. The stock is traded at 6 times the company’s value over operating income (EV/Ebitda) and valued at 12.9 times the price over earnings (P/E) for 2024.

For this reason, the recommendation was downgraded from purchase to neutral, explained the BBA.