Brazil analysts choose CBD as a retail “top pick” (BRF, CBD)

Banco Fator says Brazil has potential to report a boom growth in the retail industry (BRF, quote), thanks to new consumers in the coming years. For 2012, its “top picks” are Lojas Americanas and Pão de Açúcar Group CBD, quote). 

Analysts consider that Lojas Americanas has an “aggresive expansion plan for the coming years.”

Plus, they believe its operations have low risk and, therefore, recommend “buy,” with a target of BRL 20.22.

As for CBD, the brokerage team for retail says its strengths are the restructure and integration of the brands Ponto Frio and Casas Bahia; a strong growth potential in e-commerce; and a gain in the EBITDA margin due to the reduction in the operating expenses.

The analysts’ rating is “buy” and a target of BRL 88.92 — the equivalent of $47.80 per U.S. share.

Also, Banco Fator mentions that Lojas Renner may benefit of the “consolidation of the Camicado operations and high upside potential.”

However, its recommendation for the stock is “hold”, with target of BRL 61.64. Overall, analysts affirm retail stocks to be “well priced, except for Renner” as they are worried about the historical high gross margin and the faster growing operating expenses than revenues.

Furthermore, experts predict an ongoing higher competition in the electronic retail segment and do not foresee any big rise in B2W’s earnings in 2012. “This could dent the performance of Lojas Americanas shares,” they add.


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