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UPDATE: Evercore ISI Assumes StoneCo Ltd. (STNE) at In Line

February 18, 2022 6:21 AM EST
Get Alerts STNE Hot Sheet
Price: $11.55 -1.45%

Rating Summary:
    8 Buy, 9 Hold, 3 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 9 | Down: 23 | New: 34
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(Updated - February 18, 2022 6:22 AM EST)

Evercore ISI analyst Sheriq Sumar assumes coverage on StoneCo Ltd. (NASDAQ: STNE) with a In Line rating and a price target of $14.00.

The analyst comments "STNE’s earnings face similar headwinds from rising interest rates as PAGS, driving significant cost pressures from higher interest expenses. However, STNE will raise its prepayment yield (45% of net revenues) faster than its closest competitor, albeit at the cost of higher merchant attrition. For ‘22E/’23E, revenues should pick up materially by 57% (pro-forma for LINX) and 30%, respectively driven by: A) acquiring TPV growth outpacing the industry; B) restarting of credit originations although at a very slow pace; and C) a rise in prepayment yields. That said, increasing funding costs and near-zero margins for LINX will likely severely dampen margin prospects, keeping them well below historical levels at just 8% and 12%, respectively, for 2022E and 2023E (vs. 33%/29% in ’19/’20). We reduce our 2022E and 2023E EPS by 15% and 14% to R$2.12 and R$4.11 respectively, keeping us 7% below the Street for 2022 but in line for 2023E. Our $14, 12-month price target for STNE declines from $30, implying 14% upside. Our Base, Bull, and Bear case scenarios are $14, $24 and $10, respectively."

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 $11.15 yesterday.


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