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On Friday, JPMorgan updated its financial outlook for Localiza Rent a Car S.A. (RENT3:BZ) (OTC: LZRFY), increasing the price target to R$59.00 from R$57.00, while maintaining an Overweight rating on the stock. The company, currently valued at $7.7 billion, has shown strong momentum with a 37.9% year-to-date return according to InvestingPro data. The adjustment reflects a detailed analysis of the company’s various segments and projections for the year.
In the Rent a Car (RAC) segment, JPMorgan anticipates a 13% year-over-year increase in tariffs, despite a predicted 1.5% year-over-year decline in rental volumes. This is attributed to fleet adjustments following the high season. The expected outcome is an 11% year-over-year increase in top-line growth, with an EBITDA margin projection of 65.3% for Brazil, excluding Mexico. This growth outlook aligns with the company’s strong track record, having achieved 29% revenue growth in the last twelve months.
For the General Fleet Tariff (GTF) segment, the forecast is for tariffs to rise by 11.5% year-over-year, with rental days expected to grow by 4%. This scenario suggests a 16% increase in top-line growth for the segment. In the Seminovos segment, which deals with used vehicle sales, JPMorgan projects a sale of 75.5 thousand units and an EBITDA margin of 1.6%. The depreciation per vehicle is modeled in line with the higher end of the company’s guidance.
On a consolidated basis, JPMorgan estimates Localiza Rent a Car will achieve an EBITDA of R$3,385 million, which is a slight 1% decrease compared to the Bloomberg consensus. However, the net income projection is slightly more optimistic, set at R$807 million, representing a 0.5% increase over the Street’s consensus.
Looking ahead to 2025, JPMorgan’s EBITDA forecast remains nearly unchanged at R$14,104 million, which is 1.5% below the consensus. Nonetheless, the bottom line has been revised upwards by 3%, resulting in a projected net income of R$3,542 million, which is 5% above the consensus. The revised December-2025 price target of R$59.00, up from R$57.00, takes these projections into account. With the company’s next earnings report due on May 12, 2025, investors seeking deeper insights into Localiza’s financial health and growth metrics can access additional analysis through InvestingPro, which features 8 more exclusive tips about the company’s performance and outlook.
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