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On Wednesday, Citi analysts revised their outlook for Lojas Renner SA (B3:LREN3) (OTC:LRENY), downgrading the stock from a Buy to a Neutral rating. Despite the downgrade, the analysts raised the price target to R$20.50 from the previous target of R$15.00.
The analysts noted that short-term sales momentum for Lojas Renner appears more robust than initially anticipated for the sector. They highlighted that the company is expected to experience a sequential acceleration in the second quarter due to easier comparisons, following extreme weather conditions and floods that affected sales growth in the South during the same period last year.
Citi now projects same-store sales growth of 15.5% for the second quarter of 2025, up from the previous estimate of approximately 10% and compared to 10.8% in the first quarter of 2025. The analysts also adjusted their earnings forecasts for Lojas Renner, increasing them by 12% for 2025 and 9% for 2026.
According to Citi, Lojas Renner is trading at price-to-earnings ratios of 13.3x and 11.5x for 2025 and 2026, respectively, compared to their implied target multiple of 12.5x P/E for 2026. This assessment suggests a more limited upside for the stock, leading to the downgrade.
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