Itau BBA maintains Marfrig Global Foods stock rating at Market Perform By Investing.com
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 firm’s stance comes as Marfrig’s shares have seen a significant rise, increasing by approximately 70% over the last twelve months (LTM). This surge is attributed to the heightened volatility of BRF’s stock, in which Marfrig holds a stake.
Marfrig’s involvement with BRF and its U.S. Beef division presents contrasting influences on its performance. The company’s recent merger and acquisition activities with Minerva are set to increase its exposure to the U.S. beef market, which is anticipated to encounter difficulties in the upcoming quarters.
The valuation of Marfrig, trading at around 5 times its expected 2024 enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA), reflects its proportional interest in BRF. This valuation is seen as mixed by Itau BBA, considering the low margins from the U.S. Beef division are balanced by BRF’s strong performance.
In the U.S. beef market, the spread remained relatively unchanged this week, with both cutout and cattle prices experiencing a decrease of 0.5% and 1.5%, respectively. For the month to date, the spread has narrowed by roughly 3% month over month, as stable cattle prices contrast with a 3% decline in cutout prices during this period.
Marfrig Global Foods’ stock performance continues to be influenced by its diverse operations, and Itau BBA’s reiteration of its rating and price target reflects a cautious outlook on the company’s prospects amidst market challenges.
InvestingPro Insights
As Marfrig Global Foods (OTC: MRRTY) continues to navigate through market challenges, real-time data from InvestingPro offers additional 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 the InvestingPro Fair Value estimate of $2.02. This suggests that the stock may be fairly valued at present.
InvestingPro Tips highlight that Marfrig is a prominent player in the Food Products industry, but it suffers from weak gross profit margins, which are at 10.12% for the last twelve months as of Q4 2023.
This could be a factor in the cautious stance by analysts, as the company is not expected to be profitable this year. Despite this, Marfrig has seen a high return over the last year, with a 68.88% price total return, underscoring the stock’s recent upward trajectory.
Investors considering Marfrig’s stock should be aware that additional insights are available on InvestingPro, which could further guide their decision-making process. For those interested, there are currently 11 more InvestingPro Tips on Marfrig, and by using the exclusive coupon code PRONEWS24, readers can receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription, enriching their investment research with valuable data and analytics.
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