Sprouts Farmers Market closes $600 million revolving credit facility
Tuesday, StoneCo Ltd . (NASDAQ:STNE) received an upgraded stock rating from Citi, moving from Neutral to Buy. The financial institution also increased its price target for the company’s shares to $15.00, up from the previous $9.00. According to InvestingPro data, the stock currently trades at $12.06, with analysis indicating the shares are currently undervalued.
Citi’s decision comes with a positive outlook on StoneCo’s future financial performance. The new price target suggests a potential upside of 28% from the company’s current share price. This optimism appears well-founded, as the company has demonstrated strong momentum with a 51.32% year-to-date return and maintains a robust 73.4% gross profit margin. Citi’s analysts have adjusted their forward 12-month net income estimates for StoneCo to R$2.4 billion for 2025 and R$2.9 billion for 2026. These figures represent an increase of 17% and 28%, respectively, compared to previous estimates.
The analysts noted that StoneCo’s shares are currently trading at a price-to-earnings (P/E) ratio of 8.8 times based on the anticipated 2025 GAAP earnings. Citi’s estimates for 2025 surpass the guidance provided by StoneCo, although they remain conservative for the company’s 2027 net income guidance, even after the upward revisions. InvestingPro subscribers can access 8 additional key insights about StoneCo’s valuation and growth prospects, along with a comprehensive Pro Research Report.
Citi also mentioned that StoneCo’s earnings per share (EPS) could see a positive surprise due to the room available for share buybacks. However, they do not anticipate the sale of the Linx asset as part of the base scenario. Instead, they expect StoneCo to concentrate on improving the operations of its assets at present. This aligns with InvestingPro data showing management has been actively repurchasing shares, while the company targets 23% revenue growth for the upcoming fiscal year.
In other recent news, StoneCo Ltd reported impressive financial results for the fourth quarter of 2024, surpassing market expectations. The company achieved an earnings per share (EPS) of $2.26, exceeding the forecasted $1.95, and reported revenues of $3.61 billion, which also surpassed the anticipated $3.58 billion. StoneCo demonstrated a robust 22% year-over-year increase in adjusted earnings before taxes and an 18% rise in adjusted net income. Despite these strong results, Morgan Stanley (NYSE:MS) maintained an Underweight rating on StoneCo, while slightly raising the stock’s price target to $6.00 from $5.70. The financial firm expressed concerns about the saturation of the digital payments market in Brazil, which could pose challenges for StoneCo’s growth and profitability. Morgan Stanley’s analysis contrasts with the more optimistic sell-side consensus that expects double-digit growth for the company. StoneCo’s strategic focus remains on maximizing long-term intrinsic business value, as highlighted by CEO Pedro Ziner. Looking ahead, StoneCo projects continued growth, with expectations of adjusted gross profit exceeding BRL 7.05 billion in 2025, representing a 14% year-over-year increase.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.