Bank of America (BofA) reaffirmed its purchase recommendation for JBS shares (JBSS3), but adjusted the target price, from R$33 to R$35, after the release of the financial results for the fourth quarter of 2023, last week. To this end, he states that the company is on the right track for a strong profit recovery in 2024, according to a report signed by analyst Isabella Simonato. It also maintained the Ebitda estimate (earnings before interest, taxes, depreciation and amortization) of R$24.2 billion in 2024, an increase of 51% compared to 2023, with free cash flow of R$6.2 billion.
In the report, Bank of América assesses that Seara’s performance was disappointing in 2023, but highlights that JBS management estimates a double-digit EBITDA margin in the first quarter, historically the weakest of the year. Given this, Bank of America increased its estimate for Seara’s EBITDA margin by 0.6% to 10.1%. “We expect Seara to be responsible for 32% of JBS’s total Ebitda growth in 2024,” stated Simonato.
Bank of America also estimated that Pilgrim’s Pride will have a similar contribution to JBS’s EBITDA in 2024. Furthermore, it predicts that the operation’s EBITDA margin will be 9%, a recovery of 3% compared to the previous year, due to higher prices higher prices for chicken and lower feed costs in the United States.
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The scenario is more complicated for JBS’s beef operation in the USA, due to market conditions and operational challenges. “The Ebitda margin in 2024 is estimated to be on the lower side of the range indicated by management, from 0% to -2%,” said Simonato.
Tags: BofA maintains recommendation JBS shares JBSS3 target price
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