Understand how Raízen is unique and its action can shoot up to 80% – Money Times

Raízen is strongly positioned to capture value as demand for cleaner, renewable products increases, analysts signal (Image: Reuters/Paulo Whitaker)

THE root (ROOT4), which presents itself as the global leader in biofuels, is a unique case in the Brazilian stock market, and some analysts project that the stock has room to shoot up to 80% — considering the current price — reaching the target price of R$12 per share.

The analysis mentioned above comes from the Bank of America, which started the coverage of Raízen shares — a joint venture (shared company) between cosan (CSAN3) and shell.

Specialists at the US bank point out that Raízen is unique on the Brazilian Stock Exchange as it is unique in the bioenergy and distribution sector.

“Paper has four main avenues of growth: i) better profitability of sugar cane; ii) prices of commodity sustained added to strategic value; iii) greater market share and; iv) valuable possibilities with the ethanol 2nd generation (E2G) and biogas, which could be worth R$33 billion”, comment the analysts of the foreign bank.

O BTG Pactual (BPAC11) also started the coverage of Raízen and, according to the report also obtained by the Agro Times, after the recent IPO, the bank sees the agro company ready to start a new growth cycle, with the potential to triple the EBITDA (earnings before taxes, depreciation and amortization) in 10 years, extracting more value from the sugarcane.

“Most of the valuation potential (upsides) derives from a range of projects related to the production of cellulosic ethanol, biogas, pellets, and others, showing that the company is strongly positioned to capture value as the demand for cleaner and renewable products increases”, emphasize analysts Thiago Duarte, Pedro Soares and Henrique Brustolin.

O IPO which moved BRL 6.9 billion is in fact more than a promise, although the strong results that Raízen should deliver may seem off the horizon that investors may consider, and reinforces that the action is a rare opportunity to expose the investment portfolio to the biofuels business and renewable energy.

See below the recommendations, gathered by Agro Times, for the action of Raízen (RAIZ4):

RecommendationTarget price (BRL)Potential (%)
Bank of AmericaPurchase1281
BTG PactualPurchase1169
Now InvestmentsPurchase1053

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