Stephens has begun coverage on JBS S.A. (JBSAY, Financial) by assigning an Overweight rating accompanied by a price target of $22. The firm emphasizes JBS's extensive global presence and its diverse portfolio of protein products, which contribute to a stable and varied revenue stream. Despite recent setbacks due to challenges in U.S. beef operations, Stephens highlights the company's vertically integrated and geographically balanced structure as a key factor in cushioning against regional and commodity price fluctuations.
Moreover, the firm suggests that the prospects of a U.S. stock listing could significantly enhance JBS’s market valuation, particularly when compared to similar American companies such as Tyson Foods. Such a move could act as a catalyst for growth, aligning JBS more closely with its U.S. industry counterparts.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 1 analysts, the average target price for JBS SA (JBSAY, Financial) is $20.00 with a high estimate of $20.00 and a low estimate of $20.00. The average target implies an upside of 39.57% from the current price of $14.33. More detailed estimate data can be found on the JBS SA (JBSAY) Forecast page.
Based on the consensus recommendation from 1 brokerage firms, JBS SA's (JBSAY, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for JBS SA (JBSAY, Financial) in one year is $11.57, suggesting a downside of 19.26% from the current price of $14.33. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the JBS SA (JBSAY) Summary page.
JBSAY Key Business Developments
Release Date: May 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- JBS SA (JBSAY, Financial) reported a strong first quarter of 2025 with net sales increasing by 8.5% in US dollars and net profit jumping 50.5%.
- The company is advancing its dual listing of shares in both Brazil and the United States, which is expected to enhance international visibility and attract new investors.
- The poultry and pork businesses in Brazil and the United States delivered standout performances, with record first-quarter EBITDA margins of 19.8% and 14.8%, respectively.
- JBS USA achieved a strong performance with higher sales volume and an EBITDA margin of 12.5%, supported by a strategy of geographic and protein diversification.
- The company's leverage ratio improved significantly, decreasing from 3.66 times to 1.99 times year-over-year, indicating strong financial management.
Negative Points
- Operating cash flow recorded a negative result of $285 million, and free cash flow was negative by $970 million, impacted by increased tax payments and working capital.
- The US beef business faces challenges due to ongoing margin pressure and high cattle prices, with expectations of a difficult year ahead.
- The company is dealing with trade disruptions and tariffs, particularly affecting exports to China, which could impact margins by 1 to 1.5 percentage points.
- Working capital consumption was high due to inventory rebuilds at higher raw material prices, creating uncertainty about future cash flow generation.
- The dual listing process is subject to shareholder approval, and there is uncertainty about the outcome of the voting, which could impact the company's strategic plans.
