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Investing.com - HSBC has downgraded Cosan SA (BVMF:CSAN3) from Hold to Reduce, while lowering its price target to R$6.00 from R$8.00, implying a 20% downside potential from current levels.
The downgrade follows significant declines in the stock prices of Cosan’s key holdings, with Raizen (BVMF:RAIZ4) and Rumo (BVMF:RAIL3) falling 22% and 15% in USD terms, respectively, over the past three months.
HSBC has also increased its conglomerate discount to 35% from 30% previously, reflecting the impact of announced equity offerings on the company’s valuation.
The investment bank acknowledges potential medium to long-term benefits from Cosan’s capital raise and new strategic partnerships, including reduced leverage, improved corporate governance, and enhanced infrastructure investment expertise.
HSBC remains cautious about dilution risks from the large offering and notes that its fair value estimate could potentially rise with a possible partial sale of Compass and Moove assets or an improved macroeconomic outlook.
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