Localiza’s stock falls over 6% post-Q1 results, despite a net profit of 842 million reais exceeding expectations. Analysts remain optimistic about future rental price increases and potential stock re-evaluations.
Localiza, the prominent rental car company based in Brazil, saw its shares drop over 6% following the release of its first quarter earnings. Investors reacted sharply despite the firm reporting a net profit of 842 million reais, which translates to roughly $149.06 million. This figure was actually higher than the 799.7 million reais that had been anticipated based on a poll conducted by LSEG.
Interestingly, while Localiza’s performance led to a dip in its stock, Brazil’s main stock index, the Bovespa IBOV, managed a slight gain of 0.2%. Analysts from Bradesco BBI suggest that this decline in Localiza’s stock isn’t indicative of its underlying health, as they view the quarterly results as strong and are optimistic about the potential for further increases in rental prices.
Bradesco BBI noted in their client correspondence, “We believe the stock can re-rate as the year progresses and Localiza continues to report the factors listed above.” They seem to anticipate a positive turnaround, hinting at investor confidence in Localiza’s ongoing performance. With the ongoing economic fluctuations, it seems some investors remain cautious. Still, better-than-expected profits might put Localiza in a favorable position going forward.
In summary, Localiza’s stock experienced a noticeable decline following its Q1 results, despite reporting a higher-than-expected profit. Analysts remain largely optimistic about the company’s future due to expected rental price increases. While the short-term outlook appears challenging based on stock performance, there are signals that may point toward a positive trajectory for Localiza as the year progresses.
Original Source: www.tradingview.com
