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Investing.com - UBS initiated coverage on Brazilian bus body manufacturer Marcopolo SA (BVMF:PMOM4) with a Buy rating and a price target of R$11.30.
The Swiss bank believes the market is undervaluing Marcopolo, pricing in EBITDA 25% below UBS’s fiscal year 2027 estimates. UBS projects 3% annual bus volume growth and EBITDA margins sustaining at approximately 18.5%, significantly above the company’s historical average of around 9%.
UBS expects Marcopolo’s intercity segment to maintain momentum due to increasing demand and improved affordability, with additional upside potential from urban bus fleet renewal and continued export recovery.
The firm identified several upcoming catalysts for Marcopolo, including quarterly results that should show improving product mix in the second half of the year and potential announcement of a new Caminhos da Escola bid.
UBS views Marcopolo as a low-risk investment option ahead of Brazil’s 2026 presidential election, citing the company’s high returns (30% ROE), unlevered balance sheet, and projected dividend yields of 7% and 7.3% in 2026 and 2027, respectively, at what it considers an attractive valuation of 7x forward price-to-earnings ratio.
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