Brean Murray Upgrades Sabesp (SBS) to Buy
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Brean Murray upgrades Sabesp (NYSE: SBS) from Hold to Buy with a $77 price target.
The firm highlights that Sabesp's results appeared impressive. However, some items on the top and bottom lines disappointed, which included higher-than-anticipated selling expenses and EBITDA margins that contracted sequentially and YoY. The firm also believes that "the market has largely priced in both the potential negative effects of any purchase of EMAE assets and also an expectation that EBITDA margins at or above 50% may not be sustainable."
Overall Brean Murray said, "Regardless of whether or not an acquisition of EMAE assets materializes, or whether EBITDA margins are 50% or 46%, we still consider the shares of Sabesp the best growth story in our utility universe…We recommend investors aggressively build positions at current level."
Companhia de Saneamento Basico do Estado de Sao Paulo (Sabesp) provides basic and environmental sanitation services in Sao Paulo.
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