Canaccord cuts Lavoro stock target to $5.50, maintains Buy rating

On Tuesday, Canaccord Genuity adjusted its price target for Lavoro stock (NASDAQ:LVRO), lowering it to $5.50 from the previous $6.25. Despite the reduction, the firm continues to recommend a Buy rating for the company’s shares. Lavoro reported its first-quarter financial results for 2025, disclosing revenues of approximately $370 million, which marks a decline of about 24% compared to the same period the previous year. The company’s gross profit also saw a decrease of 4% year-over-year, settling at $57.9 million.

The revenue for the quarter fell roughly 6% short of Canaccord Genuity’s expectations. This shortfall was largely attributed to a significant 32% year-over-year drop in the Brazil Cluster, which generated around $280 million. The decrease was primarily due to a persistently challenging environment for financing inputs. Despite the lower gross profit, which dipped by approximately 3.2% year-over-year, Lavoro’s gross margins improved by 327 basis points to 15.6%. This improvement reflects the company’s ongoing strength in its high-margin Crop Care segment. According to InvestingPro, Lavoro maintains its position as a prominent player in the Trading Companies & Distributors industry, though it currently trades at elevated EBITDA and EBIT multiples.

Lavoro’s financial health further showed signs of strain as the company posted a net loss of $48.2 million for the quarter, which is a substantial widening of the loss by 232% compared to the previous year. Additionally, the company reported $9.8 million in Adjusted EBITDA, which indicates a 13.5% year-over-year decline. The results highlight the challenges Lavoro is facing in its operational markets, particularly in Brazil, as well as the impact of a difficult financing environment on its overall performance. InvestingPro analysis reveals the company operates with a moderate debt level, with a debt-to-equity ratio of 1.15. For deeper insights into Lavoro’s financial health and detailed analysis, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

In other recent news, Lavoro has experienced significant shifts in its financial landscape. The agribusiness company reported mixed results in its fiscal Q4 earnings call, with a 6% increase in annual consolidated revenue to $1.89 billion, but a substantial net loss of $77.2 million for the quarter due to rising input costs and finance charges. Despite these challenges, the company’s Grain revenue saw a significant increase, fueling optimism about future growth and operational efficiency.

Simultaneously, Barclays (LON:BARC) analyst Benjamin Theurer upgraded the company’s stock from Equalweight to Overweight, citing an attractive valuation compared to historical standards. The future enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) ratio is projected to be 7.5x, significantly lower than the historical average near 10x. However, the price target was revised downward to $5 from the previous $6, influenced by currency fluctuations, specifically the depreciation of the peso.

Theurer anticipates a positive shift in the Brazilian crop input inventory cycle during the first half of 2025, as suggested by data platforms and agricultural company discussions. However, he expressed caution regarding production forecasts across the industry. Despite the lower price target, the upgrade to Overweight indicates confidence in Lavoro’s potential for outperformance relative to its sector peers. These are among the recent developments that investors will likely monitor in the coming months.

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