With the quarterly results of B3 (B3SA3) approaching, analysts at Genial Investimentos assess that the company’s shares are “cheap”.
According to analysts Eduardo Nishio, Wagner Biondo and Felipe Oller, the company’s operational data B3SA3 reported so far indicate that 2024 could be a weak year for financial volume traded (ADTV), with a drop of 10.5% in the annual comparison (R$ 23.4 billion).
“However, we hope that with the fall in the Selic and an improvement in the global macro scenario, a recovery may occur throughout the year, but we still estimate a contraction of -3.7% y/y for the ADTV in 2024”, they state. the specialists.
In projections, the house estimates that the B3 net profit reached R$1.02 billion, an increase of 11.5% in the quarter, but a decrease of 6.3% compared to the same quarter of the previous year (1Q23).
This result benefits quarterly from the reduction in expense levels, as in 4Q23 there was an anticipation that increased the cost line, explain the analysts.
The annual contraction, according to the house, must be caused by some factors, such as:
- Leaner revenues due to weak performance of the listed segment;
- Higher operating expenses, partly due to the Desenrola program;
- Lower financial result, caused by the increase in financial expenses with the 7th issue of debentures.
Genial remains optimistic about B3 shares (B3SA3)
Despite the weak results predicted by Genial, the company believes that B3 has good prospects for recovery and therefore evaluates the company on the Brazilian stock exchange as “cheap”.
Buying an attractive valuation and positivity regarding the reduction in the basic interest rate, Selic, analysts state that the thesis “remains valid in the long term.”
However, they counter: “we recognize that both the local and international scenario have been deteriorating throughout the year, working against our investment thesis.”
At this rate, the house reiterates its “Buy” recommendation for B3 shares.
“Although the year should not be very encouraging, we believe that the B3 shares are already somewhat priced in, trading at just 14.0x P/E 24E, while international peers trade closer to 20x P/E 24E,” the report states.
The target price for B3SA3 shares it was reduced, however, from R$17.10 to R$13.80 (upside of +26%), taking into account the rise in the United States interest rate curve and the “less attractive momentum” for the company.
More projections for B3SA3
Furthermore, Genial’s expectations for B3 are:
- In the quarter, gross revenue was relatively stable (-0.8% y/y and -2.1% q/q);
- For 2024, gross revenue growing only +4.5% y/y;
- Operating expenses at R$925 million, in 1Q23 (-13.7% q/t and +8.6% y/y);
- Operating expenses at R$3.2 billion in 2024 (-13.4% y/y).
- Financial result of R$70 million (+184.8% q/t and -50.8% y/y);
- In 2024, financial result of R$340 million (+10.1% y/y).
The financial result of B3 better in 2024, according to analysts, it is driven by “better cash generation boosting financial revenues and lower financial expenses due to the fall in the Selic rate.
