Localiza Shares Slide Despite Strong Q1 Results, Analysts Remain Optimistic
Localiza’s shares dropped over 6% after Q1 results, despite a net profit of 842 million reais, surpassing expectations. Analysts believe the stock’s decline does not represent its strong performance and foresee positive growth due to rising rental prices.
Shares of Brazilian rental car company Localiza saw a decline of over 6% after the release of its first-quarter results, making it one of the largest losers on Brazil’s Bovespa index, which saw a modest gain of 0.2%. Despite this setback, Localiza reported a net profit of 842 million reais, equating to approximately $149.06 million. This figure surpassed the expected 799.7 million reais projected in an LSEG poll, indicating a solid performance even amid the stock drop.
Analysts from Bradesco BBI expressed surprise at the stock’s reaction, suggesting that the decline does not align with the strong quarterly results they observed. Furthermore, they highlighted expectations for ongoing rental price increases, which they believe could positively impact the company’s future performance. In a note to clients, they stated, “We believe the stock can re-rate as the year progresses and Localiza continues to report the factors listed above.” Their assessment indicates confidence in Localiza’s market position despite the initial market reaction.
In summary, while Localiza’s shares suffered a notable drop following their first-quarter earnings announcement, the company’s net profit exceeded expectations. Analysts maintain that the stock’s performance does not accurately reflect the strong results and positive market trends. There is an optimistic outlook for Localiza, with expectations of continued rental price increases possibly contributing to a recovery in stock value over the coming year.
Original Source: www.tradingview.com
