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    30% high in 5 days: Does the Locaweb rocket (LWSA3) have more fuel to burn?

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    Locaweb: is it a good time to buy stock after a 30% jump in a week? (Image: Money Times/ Gustavo Kahil)

    THE Locaweb (LWSA3) was a highlight this week, up more than 30% in five days. What explains this sudden jump in such a short space of time?

    In the view of analysts Earth Régis Chinchila and Luis Novaes, the prospect that the boom cycle is ending favors growth companies, among them are techs such as Locaweb.

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    “In addition, the company’s directors had already gone public this week to talk about how they see the company’s coming months with optimism”, they say.

    Chinchilla and Novaes also say that the company was well discounted. Even so, the team at Earth keeps the neutral indication for the paper.

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    According to the market consensus compiled by Reutersof 11 analysts, nine have a buy recommendation, two neutral and no sell recommendation, with an average price target of R$ 14.09, up potential of 57%.

    Good results from Locaweb

    Recently, the BTG Pactual (BPAC11) it’s the Credit Suisse released reports with positive projections for the company’s results.

    O Credit Suisse sees profit rising from R$3.5 million in the second quarter of 2021 to R$10.5 million in the same period in 2022, in addition to net revenue of R$275 million.

    O BTG is even more optimistic, with an expectation of revenue of R$ 280 million. According to the bank, the result should be driven by M&A operations (mergers and acquisitions) and strong organic growth in the business unit. Commerce.

    “We estimate that commerce revenues will grow 101% year-over-year, with organic revenues up around 40%,” say Carlos Sequeira and Osni Carfi. It would be a remarkable pace of growth, assess the analysts, considering that the e-commerce market is growing at around 10%.

    BTG’s adjusted Ebitda (earnings before interest, taxes, depreciation and amortization) projection is R$39.8 million, an annual decrease of 3.6%. For the year, the bank’s estimates are 20% above the market consensus (R$190 million vs. R$160 million).

    According to BTGa Locaweb is trading at 19 times P/E (price over earnings) estimated for 2023, which is a good entry point.

    For the bank, the action is well discounted in relation to players like VTEX and Shopify, even with Locaweb growing at a similar pace to these companies.

    With a target price of BRL 10, the harvest also bets on the stock due to its solid business model and good execution.

    The bank understands that the name is one of the best positioned to capture the digitization of small and medium-sized companies.

    With Diana Cheng

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    Disclaimer

    O Money Times publishes informative articles of a journalistic nature. This publication does not constitute an investment recommendation.

    Source: Moneytimes

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