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UPDATE: Cantor Fitzgerald Starts StoneCo Ltd. (STNE) at Overweight

April 8, 2022 5:57 AM EDT
Get Alerts STNE Hot Sheet
Price: $10.31 -1.25%

Rating Summary:
    8 Buy, 8 Hold, 4 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 0 | Down: 5 | New: 0
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(Updated - April 8, 2022 5:57 AM EDT)

Cantor Fitzgerald analyst Josh Siegler initiates coverage on StoneCo Ltd. (NASDAQ: STNE) with a Overweight rating and a price target of $15.00.

The analyst comments "We are initiating coverage of StoneCo Ltd. (“StoneCo”) with an Overweight rating and a 12-mo. $15 price target. StoneCo is a Brazilian merchant acquirer and neobank that primarily targets small & medium-sized businesses (SMBs) and micro-merchants (MSMBs). STNE stock declined ~83% over the past year. We attribute a significant portion of STNE’s underperformance to the difficult Brazilian macro environment. In response to high inflation, the Brazilian Central Bank (BCB) began to sharply hike rates, which negatively impacted StoneCo’s spreads. Although we believe Brazilian inflation will remain elevated in 2022E, STNE stock has overcorrected, in our view. We believe the market may be overlooking the company's ability to limit the financial expense impact through higher prepayment fees. Further, with an established SMB client base, StoneCo’s exposure to prepayment risk may be more limited in scope than close competitor, PagSeguro (PAGS, OW). STNE now trades at a 65% discount to its historical average FY2 P/E multiple. We believe the current, depressed valuation represents a compelling entry point for a Brazilian merchant acquirer benefiting from ongoing secular tailwinds with additional upside from a recent, transformative merger."

For an analyst ratings summary and ratings history on StoneCo Ltd. click here. For more ratings news on StoneCo Ltd. click here.

Shares of StoneCo Ltd. closed at $11.25 yesterday.


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