Despite a 30% year-to-date increase, JPMorgan continues endorsing Marcopolos stock (POMO4) with a strong buy recommendation.The firm raised its target price from R$10 to R$12, signaling a 73% growth potential from Thursdays close at R$6.93.
Consequently, by midday Friday in So Paulo, POMO4s value had risen by 7.07% to R$7.32.Analysts emphasize that the market has not fully recognized Marcopolos improved structural margins.
They expect this oversight will lead to upward revisions in both estimates and sentiment.The optimism also stems from a robust domestic market, marked by increased volumes of intercity, urban, and microbuses, alongside better international operations.
Despite these improvements, JPMorgan considers the valuation appealing.Currently, the stocks P/E ratio for 2025 stands at 5.5, reflecting a 60% discount from its ten-year average, significantly lower than the 10.3 times observed in 2012 and 2013.Marcopolo Shares Soar as JPMorgan Forecasts Over 70% Upside Potential.
(Photo Internet reproduction)JPMorgan forecasts an 8% dividend yield for Marcopolo by 2025 with a 50% payout ratio.
Increasing the payout to 75% would elevate the yield to about 12%.Additionally, the trading volume has reached a record high, averaging $8.5 million daily over the past three months.
This surge suggests a premium above historical levels.Marcopolos Record Profit ProjectionsThe outlook for bus demand remains positive, with projections showing steady volumes over the next two to three years across all segments.Analysts anticipate stronger performance in the second half of the year.
They expect third-quarter results to outperform the second quarter, with fourth-quarter outcomes likely surpassing the third.JPMorgan predicts Marcopolo will achieve a record net profit of R$1.2 billion ($214 million) this year, six times higher than in 2019, with a net margin of 14% compared to 5% previously.This level of profitability is expected to persist, driven by recent structural cost changes, including factory closures and production shifts.The recovery in international operations continues to progress, as demonstrated by the subsidiary NFI.This year, NFIs EBITDA is projected to hit US$253 million, with an expected rise to US$363 million in 2025, up from R$69 million ($12.32) last year.In short, this performance underscores Marcopolos strategic realignment and successful execution on a global scale.