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Investing.com - UBS downgraded Sendas Distribuidora SA (ASAI3:BZ) from Buy to Neutral on Thursday, setting a price target of R$11.50 amid concerns over sales growth potential.
The downgrade follows the company’s third-quarter results, with UBS citing no expectation of "meaningful improvement in underlying SSS trends amid macro headwinds and a still-challenging competitive environment."
UBS slightly lowered its top-line estimates for Sendas, adjusting its pre-IFRS 16 net income forecasts to R$1.0 billion for 2025, R$1.1 billion for 2026, and R$1.7 billion for 2027.
The investment bank’s reverse DCF analysis indicates the market is pricing in a five-year top-line compound annual growth rate of approximately 5-6% with flattish margins, which aligns with UBS’s own forecasts.
With shares trading at 12x/8x 2026/27E pre-IFRS 16 PE, UBS views the risk-reward as balanced, noting that while near-term growth outlook remains soft, Sendas has demonstrated "proven ability to execute and quickly adapt to changing consumer behavior."
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