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Investing.com -- Pluxee shares fell 11% after the company acknowledged potential significant impacts from Brazil’s announced reforms to the PAT (Workers’ Food Program) system, which could substantially affect its business in the region.
The meal benefits provider issued a statement confirming it will thoroughly assess financial implications and possible mitigation measures once the full decree is published. Pluxee also indicated it is considering legal action, both independently and in coordination with ABBT, Brazil’s meal voucher association.
Analysts estimate the impact could be severe given Pluxee’s substantial exposure to the Brazilian market. Morgan Stanley suggested the reforms could potentially result in a 30% EBITDA impact for Pluxee, as the company’s Brazil exposure is more than double that of competitor Edenred, which estimated a 13 percentage point EBITDA impact from the same reforms.
"If correct, this would be c.35% to EPS, and put the shares on 12x P/E and 2x EV/EBITDA (reflecting the high level of cash it holds) after reflecting this morning’s -10% share price move," Morgan Stanley noted in its analysis.
The market reaction reflects investor concerns about the potential long-term earnings impact on Pluxee, whose business model in Brazil could face significant disruption from the regulatory changes. The company’s shares continued to decline as investors awaited more clarity on the final decree and Pluxee’s mitigation strategy.
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