There is an action within the vehicle rent that deserves the attention of the investor, in the opinion of the Itaú BBA. Analysts believe that, despite a still cloudy short term, the medium term visibility of the find (RENT3) improved.
In addition, with a greater expectation of lower interest rates in the near future, investors seem more inclined to look to 2024 and favor stocks exposed to the Selic. Within this context, BBA considers that Localiza has one of the best roles to compose the portfolio now, as it offers:
- potential for revisions to positive earnings estimates for 2024 due to surprisingly positive rent margins in the first quarter of 2023;
- long-term profile and a leveraged balance sheet;
- valuation discounted 16 times P/E (price to earnings) for 2024, 27% below its historical average and 11% below average for the basket with other high-end premium names such as B3 (B3SA3), Weg (WEGE3) It is Ambev (ABEV3); It is
- risk of downside (fall) limited.
“The structural aspects of the business seem to show an above-average performance, even under the expectations of the company itself, with Ebitda margins from rents expanding due to synergies with Locamerica [Unidas]the maintenance of falling expenses due to the rejuvenation of the fleet and fixed costs in dilution”, comment analysts Daniel Gasparete, Gabriel Rezende and Luiz Capistrano, in a report published this week.
These trends, they add, will benefit margins going forward, as synergies are just beginning, average fleet age is still suboptimal (13 months vs. approximately eight months in 2019) and growth will continue to dilute costs.
BBA also points out that Localiza is one of the few companies in the market that takes advantage of the high quality seal, which leads investors to favor the stock, giving preference to it over bigger beta names in uncertain times like the current one.
Despite seeing limited negative risk potential, BBA points out that there is a certain risk of downside due to possible tax reforms, especially on the distribution of interest on own capital (JCP).
The BBA has an “outperform” recommendation (expected performance above the market average, equivalent to a “buy”) for Localiza’s shares, with a target price for the end of 2023 of BRL 76.
Source: Moneytimes
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