Stoneco (STNE – Research Report), the Technology sector company, was revisited by a Wall Street analyst yesterday. Analyst Jorge Kuri from Morgan Stanley maintained a Sell rating on the stock and has a $5.70 price target.
Jorge Kuri has given his Sell rating due to a combination of factors affecting Stoneco’s financial performance. The company reported a significant net loss primarily due to a substantial impairment loss in its software business unit. Although managerial net income showed an increase, it was largely aided by lower taxes, which raises concerns about the sustainability of such performance.
Additionally, Stoneco’s provisioning for risk was notably low, which could be problematic given the trends in credit growth and non-performing loans. The company’s guidance for the upcoming year appears overly optimistic compared to consensus estimates, suggesting potential misalignment with market expectations. Furthermore, while total revenue and income were in line with estimates, the company’s market share gains were driven by low-margin volumes, and it lost market share in more profitable credit and debit transactions, highlighting underlying weaknesses in its business model.
Kuri covers the Financial sector, focusing on stocks such as XP, Inter & Company Incorporation Class A, and Bancolombia. According to TipRanks, Kuri has an average return of -0.9% and a 48.94% success rate on recommended stocks.
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