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Investing.com - Jefferies initiated coverage on Brazilian health insurer Hapvida Participacoes e Investimentos SA (BVMF:HAPV3) with a Hold rating and a price target of R$31.50.
The research firm identified Hapvida as the leading health insurer in Brazil but noted several challenges facing the company following its merger with NDI.
According to Jefferies, the NDI merger has worsened Hapvida’s leverage position, increased tax inefficiencies, and limited dividend payout by introducing significant goodwill.
The firm also pointed out that Hapvida faces growth limitations due to a stagnant industry environment and increasing competition in the Brazilian health insurance market.
While Jefferies maintains a more conservative outlook on Hapvida, it considers the current valuation to be fair, leading to the Hold rating, with the firm stating it prefers exposure to healthcare providers instead.
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