OIBR3: why did Oi’s shares soar 73% in 3 trading sessions?

Oi shares (OIBR3) took investors by surprise this week. It turns out that the shares soared by around 57% in the last two trading sessions, on the 24th and 25th of January. And, on Friday (20), they closed the trading session with an increase of 16%.

Altogether, telecom shares rise around 73% in the last 3 trading sessions. In addition to the increase, the volume and number of trades with the shares were also atypical in the period.

After all, what happened?

In a statement after questions from B3 and the Brazilian Securities Commission (CVM), not even Oi was able to explain the reasons behind the surge in OIBR3 shares.

“Oi clarifies that there are no relevant facts or acts that, in its understanding, could justify possible atypical fluctuations in the number of trades and in the traded quantity of the company’s shares, in addition to those already widely disclosed to the market”, explained the company.

In practice, there is no news about the company that justifies the oscillation, as well as nothing has changed in relation to the fundamentals and perspectives on Oi.

the end of judicial recovery of the company, which lasted more than 6 years, was announced in December last year. But, although it was good news, it was not enough for market analysts to recommend buying the shares.

The company came out of the process much leaner after selling several businesses, such as its mobile phone line. Now, Oi is basically a fiber optic company.

On the other hand, it still has a high debt and, even with the recent appreciation, the OIBR3 shares have accumulated a drop of 77% in the last 12 months. And, in the last 5 years, Oi has lost more than 90% of its market value on the stock exchange.

For all these reasons, analysts remain skeptical about the shares and prefer to watch the next chapters of this soap opera from afar.

Analysts at Empiricus Research, for example, have already recommended Oi’s shares in the past, believing that, with the judicial recovery, the company would be able to recover. However, expectations were far from reality…

According to analysts, the macroeconomic scenario is difficult. In a world of higher interest rates and inflation, companies that are not profitable at present and are in the process of recovery, as is the case of Oi, lose their attractiveness to investors.

In this more uncertain and risky scenario, they prefer to pay attention to companies that they call “quality”. That is, those with strong cash generation, which are profitable now and pay good dividends.

That’s why, in their opinion, investors should stay out of Oi’s shares. As previously mentioned, despite the significant rise, the company’s fundamentals and analysts’ skepticism remain the same.

Instead, they believe that the investor should buy the shares of a telecom better than Oi. She is one of the company’s competitors and is about to boost your dividend payout to shareholders.

She wants to distribute almost 100% of her earnings in dividends… and you can ‘bite up’ a slice

In the last 12 months, this telecom had a 9% annualized dividend yield. But everything indicates that it can distribute even greater dividends in the coming years…

This is because the company is seeking to expand its fiber optic network to 50% by the end of 2024. In addition, it is improving its results through cost cuts.

“These factors, combined with low leverage, provide the company with very solid cash generation and a payout (portion of profit distributed in earnings) that should remain close to 100% in the near future”explain the analysts.

And needless to say, this is music to the ears of dividend-loving investors…

As if the distribution of “fat” dividends were not enough, telecom is still at one of the best price levels of the last 5 years.

See the chart below:

This is the history of the company’s Ev/Ebitda multiple from 2017 to 2022. It relativizes the current value of the firm by its Ebitda (earnings before interest, taxes, depreciation and amortization) of the last 12 months.

Currently, the company is trading at something close to 4.41 times Ev/Ebitda. In the last 5 years, it has only reached a level similar to this one in two moments:

• In mid-October 2018; and
• Between July and August 2021.

For these reasons, analysts at Empiricus Research believe that the shares of this telecom company are a good choice.

In a recent reportEmpiricus Research analysts revealed the name of this telecom stock to subscribers of the portfolio called “Cows Milk”.

This is the house’s dividend-focused portfolio. Since it was created, in February 2014, until January 1, 2023, it yielded 206.5% profit. That is, tripled the money who followed the analysts’ recommendations to the letter.

By way of comparison, the Ibovespa, the stock exchange’s main index, yielded “only” 161% in the same period.

Now, you can discover one of the indications in this portfolio without being a subscriber and for free. That’s because Empiricus Investimentos, a broker from the same group, released the report as a courtesy to anyone interested.

To access, just click the button below and follow the step by step. It’s simple, fast and completely free:

I recommend that you read it, get to know the analysts’ recommendations and only then decide if it makes sense for your equity.

You don’t have to spend anything at any time, but you can gain a lot with all the information you will find. Remember: the first step to investing intelligently is to seek information. This report is available to you for free..