Via Varejo: coronavirus does not affect the confidence of Credit Suisse and XP; BTG is cautious

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Via Frio Point Retail
(Image: Disclosure / Ponto Frio)

The results of the fourth quarter, released on Wednesday (25), show that the Via Retail (VVAR3) is well prepared to face the period of coronavirus and get out of the crisis generating value for investors.

This is, at least, the bet of the Credit Suisse and the XP Investments. The BTG Pactual he is more cautious, precisely because of the unpredictability caused by the pandemic.

What pleased analysts the most were the first positive signs of the retailer’s management change, with the return, under their control, of the Klein family – founder of Bahia Houses.

“We believe that the first lines and profitability of 4Q19 show the first signs that the restructuring is, in some way, materializing”, affirm Victor Saragiotto and Pedro Pinto, who sign the Credit Suisse report.

Pedro Fagundes, of XP Investimentos, adds that the changes made by the new board are an asset for Via Varejo to face the difficulties caused by the pandemic in the short term.

Highlights

These include strengthening online sales, improving profitability and strengthening ties with suppliers, and the ability to execute the new board.

Eye of the owner: Michael Klein, of the founding family of Casas Bahia, returned to control of Via Varejo (Image: Patricia Monteiro / Bloomberg)

“Although we recognize that the crisis triggered by the coronavirus will increase operational complexity over the next few months, we believe that the company is prepared and sufficiently capitalized to get through this period,” says Fagundes.

BTG Pactual is the only one that contradicts optimism, among the institutions that have already published reports on the company’s results and prospects. Luiz Guanais and Gabriel Savi, who signed the analysis, are mainly concerned with the potential effects of coronavirus on companies in the coming months.

“We plan to revise our Via Varejo numbers soon,” they say.

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“Even after a large sales round (with VVAR3 falling 50% in the year to date), we remain cautious with the paper, given the challenging scenario on the demand side and its effects on operations and indebtedness in the short term”, they add

For this reason, BTG reiterates its neutral recommendation for securities, with a target price of R $ 8. XP Investimentos indicates a purchase, and Credit Suisse, outperform (expected performance above the market average), with a target price of R $ 21.

See Via Varejo’s 4Q19 earnings report.





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