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The Steaks Are High For Marfrig

Jun. 08, 2020 11:20 AM ETMarfrig Global Foods S.A. (MRRTY)
James Cherry profile picture
James Cherry


  • If live cattle prices fall as predicted by Trading Economics' analysts, then beef price should also fall.
  • Unless Marfrig can increase its total volume sold by more than 15% y-o-y, then being profitable for the fiscal year of 2020 is unlikely for them.
  • Over the past couple of years, the company sold its Keystone operations to Tyson Foods and increased its ownership of National Beef.

I will begin my analysis of Marfrig in a very unorthodox manner for me due to the glance I had at their balance sheet. Before I get into the results of my study, I would like to explain why I chose to analyze Marfrig (OTCPK:MRRTY). The company has many brands in its portfolio, but only one of them do I purchase. Bassi and Bassi Wagyu are my go-to brands when I want to eat a great steak and are the reason why I decided to analyze Marfrig. A friend of mine owns a steakhouse, and he swears by Bassi too.

Analysts' Target Prices And Recommendations

In Brazil, investor relations departments usually receive the sell-side reports written on their company, and they publish the reports' target price and recommendation on their website. Occasionally, I review this information, but I have never used it as a part of my research until today.

Figure 1 - Sell-side Analysts' Estimates

Institution Recom. Target R$ Last Update
JEFFERIES Buy R$ 16.00 5/20/2020
BARCLAYS Buy R$ 16.00 5/19/2020
CREDIT SUISSE Buy R$ 16.00 5/6/2020
BRADESCO Hold R$ 10.00 3/30/2020
BTG PACTUAL Hold R$ 11.00 3/18/2020
ELEVEN FINANCIAL Buy R$ 18.00 2/20/2020
JP MORGAN Buy R$ 13.00 2/13/2020
HSBC Buy R$ 14.00 1/29/2020
CITI Buy R$ 14.00 1/13/2020
SANTANDER Buy R$ 16.00 1/6/2020

Source: Company's website as of 06/01/2020

If you go to the website, you will see that I have removed the estimates that were last updated in 2019. I remove these three older reports to ensure that any new material changes to the company were considered.

Figure 2 - Target Price Statistics

Source: Company's website as of 06/01/2020

The average target price for MRRTY is R$14.64, and it has a standard deviation of

This article was written by

James Cherry profile picture
I am the Head of Content Strategy at Sproutfi, a fintech located in Brazil that is democratizing investing in Latin America.  I have over 13 years of experience in the Food Industry, ranging from plant engineer to Corporate Development and FP&A.You, the reader, will notice that most of my articles were written about investment ideas I was researching for my investments.My alma mater is the University of Arkansas, where I graduated with a BA and an MSc in Operations Management. I served in the United States Army for six years and was deployed several times, including in Iraq. After completing my military obligation, I moved to Brazil to begin my career in Finance. I received an MBA in International Business from FIA/FEA at the University of Sao Paulo. I have passed the Level 1 and Level 2 CFA Exams. My hobbies are: playing the guitar and drums, longboarding, mountain biking, scuba diving, reading non-fiction books, and giving financial advice to low-income households.Any article in Seeking Alpha reflects my opinion and not the opinion of Sproutfi.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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