Raymond James says CBD is still cheap (CBD)

Raymond James considers Pão de Açúcar Group (CBD, quote) cheaply priced as the market has yet to fully digest the value of the company’s Nova.com e-commerce business.

“Buy CBD and get Nova.com for free,” suggests legendary Brazilian retail analyst Daniela Bretthauer at Raymond James.

According to her, Nova.com has been growing faster than Brazil’s overall e-commerce market, due mainly to its “strong brands and execution and competitive prices.”

“At the end of 2011, Nova.com should be only 30% smaller than B2W, Brazil’s largest e-commerce player,” she adds.

As a result, she now believes that Nova.com will exceed B2W’s sales by 2014.

Raymond James is now reinstating their “outperform” recommendation on CBD with a target price of $49, for potential upside of roughly 25%. They find attractive that the stock trades at an estimated 2012 P/E and EV/EBITDA of 16.5x and 7.4x, respectively. 

One note: the analysts are now revising their estimates for CBD following 3Q11 results and believe the 4Q is seasonally the strongest for the company.

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