Deutsche Bank lifts Cosan, Sao Martinho price targets, recommends Sao Martinho
Jun 21, 2012 - Deutsche Bank has lifted the price targets of Brazilian sugar and ethanol producers Cosan (SAO:CSAN3) and Sao Martinho (SAO:SMTO3), and said that it now prefers Sao Martinho among local sector companies.
The revisions follow the analysts' updated estimates for the sector.
For Cosan, the price target is now BRL 37.20, instead of BRL 30, but the recommendation was reduced to "hold".
For Sao Martinho, the analysts recommend "buy", with a price target of BRL 28, up from the BRL 22 earlier.
Deutsche Bank still believes that Cosan is a company with high-quality assets, strong management team and positive long-term vision. However, it has made a number of deals which have not been entirely reflected by the market. There are some projects which still pend regulatory or shareholders approval. When their execution begins the creation of value will become more clear, the experts outlined.
The "buy" recommendation of Sao Martinho was justified with the company's incorporation of the 32.18% stake in sugar and ethanol mill Santa Cruz. For Deutsche Bank, the deal represents a change in the growth strategy of Sao Martinho, which is positive.
At 1159 local time today, Sao Martinho was trading up 1.34% at BRL 21.93 in Sao Paulo, while Cosan was falling 1.19% to BRL 30.63 at 1208 local time.
(BRL 1 = USD 0.492/EUR 0.389)