RD shares jump 6% and surpass R $ 101 with a brilliant 2020 projection - but analysts continue with an old question

RD shares jump 6% and surpass R $ 101 with a brilliant 2020 projection - but analysts continue with an old question RADL3 paper renewed historic maxim - which raises the question of whether the asset is too expensive

SÃO PAULO -A RD (RADL3), former Raia Drogasil, brought yet another proof of how it can surprise investors, showing that it continues on an expansion path despite the competitive environment still strong and even with its action being considered "expensive" by great part of the analysts who covers the papers.

After having a very positive second quarter after very complicated periods with more aggressive competition, the pharmacy chain gave more good news to its investors and saw their shares jump up to 6.52%, in the maximum intraday history reaching R $ 101 , 79. The stock closed close to the maximum, with gains of 6.22%, at R $ 101.50.

The move occurs after RD communicates the forecast that it will open 240 stores next year, showing its capacity for expansion even at a time still challenging for the economy. "The projections were prepared in the light of our past experience and consider our expectations about our operations for the coming year," said the company in the statement.

According to the pharmaceutical company, the projections take into account the expansion strategy; the financial capacity to support investments; obtaining attractive commercial points with adequate return expectations; ability to implement new stores, including the engineering structure and the availability of qualified employees within the career plan to operate such stores.

Vinicius Figueiredo, an analyst at Itaú BBA, saw the news as quite positive, since the previous expectation was for the opening of 200 points of sale in 2020. Based on the previous estimate, the projection for next year points to a stability in the gross margin and a slight expansion of the EBITDA margin (20bps) in 2020, after two very challenging years

However, with the new guidance - opening 240 gross openings - the expectation is that, naturally, an upward revision of the numbers will occur. Figueiredo adds that the company's strong guidance for the expansion of the sales area is the result of the slowdown in the opening of competitors' stores, mainly due to the drop in profitability and the more challenging financial situation of the average of rivals.

"The announcement indicates an expectation of a bright [2020] year for the company, due to a combination of strong expansion in the sales area, growth above the SSS inflation level and improved profitability," he added.

In the same vein, Brasil Plural & nbsp; points out that the new guidance reinforces the view that RD is on its way to becoming the leading pharmaceutical company in the sector, since it is well on track to become a major player in the North and Northeast regions.

In addition, despite the aggressive expansion, there is no great threat to the current recovery of sales in the same stores as the company, as the performance of the recently matured ones must be sufficient to dilute any relevant costs that may be generated.

Thus, points Credit Suisse, it is increasingly clear that the company should continue to gain market share, especially after the slowdown movement of the main competitors in the opening of stores.

The days are less cloudy for the DR amid the scenario of more rational competition and expansion of the DR. However, after the strong increase of almost 80% in 2019, the question of whether it is worth buying the stock gains even more strength.

Of the 19 houses consulted by Bloomberg, only 5 have a recommendation equivalent to the purchase, while 9 are neutral and 5 recommend selling the paper.

Morgan Stanley is one of those who have a neutral recommendation for the roles. Despite highlighting that the company has an attractive and consolidated history, the view of analysts is that it is already priced in assets. "Even with more growth and space to gradually recover margins, we believe that the multiples are high", they evaluate. On the other hand, Brasil Plural and BB Investimentos are optimistic about the company - and believe that there is still room for the paper to rise.

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