Minerva (Beef3): XP ‘Viras Page’ and elects action as Top Pick, with perspective of Selic cuts in the coming years

THE XP Investments raised your recommendation to Minerva Foods (BEEF3) Neutral for purchase, choosing the action as your Top Pick (Favorite Action) In the segment of “Agribusiness, Food and Beverages”, with a new target price of R $ 7.90 (high potential of 66.32%).

The change happens after the completion of the supply of capital and updating the owner model of supply and demand for proteins.

Although analysts recognize that the optimistic scenario is not free of risk, mainly because of high leverage, they reinforce a constructive view.

“Minerva stands out as the only name in our agribusiness coverage and food and beverage that offers a story of momentum profits, driven by favorable grounds for supply and demand and the expansion of recently acquired assets. In addition, the action is well positioned as an attractive opportunity in a macroeconomic scenario of expectation of interest rates in the coming years, ”says Leonardo Alencar, Pedro Fonseca and Samuel Isaak.

BEEF3: favorable impulse and thesis risks

XP expects the favorable impulse to accelerate to Minerva in the next quarters, driven by:

1. Expansion of recently acquired plants, both in volumes and prices, where we adopt conservative assumptions;
2. Favorable perspective of supply and demand for global protein prices, supported by a global protein deficit;
3. More constructive view for exports, with export prices gaining strength (last week’s accompaniment is 11.8% above the average of March).

“We updated our proposal owner and demand owner and now we have designed a better than expected cattle availability of 2025. This should act as an important positive factor for the company’s margins in the next quarters as the phase of ramp-up [aumento gradual da produção ou das operações] advances ”.

Among the risks to thesis are:

1. The Ramp-Up premises of the new assets;
2. Exchange rates;
3. Interest rates.

“Our conclusion is that the scenario has a positive asymmetry in terms of valuation and profits. Even in an extreme scenario, we estimated that the action would be negotiating at 4.9x EV/EBITDA for 2025 and with a yield From 9.2% to 2026. Although this is clearly not a particularly attractive scenario, it reinforces our view that asymmetry remains positive. ”