On Tuesday, Itau BBA maintained its Market Perform rating and a R$10.00 stock price target on Marfrig Global Foods SA (MRFG3:BZ) (OTC: MRRTY). The company’s stance comes after Marfrig shares saw a significant rise, rising around 70% in the last twelve months (LTM). This increase is attributed to increased volatility in BRF shares, in which Marfrig holds a stake.
Marfrig’s involvement with BRF and its US Beef division presents mixed influences on its performance. The company’s recent merger and acquisition activities with Minerva are set to increase its exposure to the US beef market, which is expected to experience challenges in the coming quarters.
Marfrig’s valuation of approximately 5 times its expected 2024 enterprise value in terms of earnings before interest, taxes, depreciation and amortization (EV/EBITDA) reflects its proportionate interest in BRF. This assessment is considered mixed by Itau BBA, considering that the US Beef division’s low margins are balanced by BRF’s strong performance.
In the U.S. beef market, the spread remained relatively unchanged this week, with both cut and cattle prices declining 0.5% and 1.5%, respectively. Month-to-date, the spread has narrowed approximately 3% month over month, as stable livestock prices contrast with a 3% decline in limit prices during this period.
Marfrig Global Foods’ stock performance continues to be impacted by its various operations, and Itau BBA’s reiteration of its rating and price target reflects a cautious outlook on the company’s prospects amid market challenges.
Insights on InvestingPro
As Marfrig Global Foods (OTC: MRRTY) continues to face market challenges, real-time data from InvestingPro offers further context to its financial health and stock performance.
Marfrig’s market capitalization stands at $1.87 billion, and while the company has been trading near its 52-week high, the price is currently at $2.09, just below its fair value estimate by InvestingPro of $2.02. This suggests the stock may be fairly valued at the moment.
InvestingPro tips highlight that Marfrig is a prominent player in the food industry, but suffers from weak gross profit margins, which are at 10.12% for the trailing twelve months as of Q4 2023.
This could be a factor in analysts’ cautious attitude, as the company is not expected to post a profit this year. Despite this, Marfrig has seen a high return over the past year, with a total price return of 68.88%, underscoring the stock’s recent bullish trajectory.
Investors evaluating Marfrig stock should be aware that additional insights are available on InvestingPro, which may further guide their decision making. For those interested, there are currently 11 other InvestingPro tips on Marfrig and using the exclusive coupon code PRONEWS24readers can receive an additional 10% discount on one-year or two-year Pro and Pro+ subscriptions, enriching their investment research with valuable data and analysis.
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