Assaí price target raised to R$ 17 by Bank of America

Bank of America has raised its price target for Assaí (ASAI3) to R$ 17, reaffirming a buy rating. Analysts suggest that recent election outcomes in Brazil may increase the likelihood of fiscal reforms and greater public account discipline, which could benefit the retail chain.

The bank’s positive outlook is closely tied to the trajectory of interest rates. Projections indicate that every one percent cut in the basic interest rate could add 6% to the company’s earnings per share (EPS). Furthermore, a more favorable fiscal environment may lead to a more pronounced monetary easing cycle than currently priced by the market.

Assaí’s potential for growth is also supported by expectations of increased sales in both B2B and B2C segments. While food inflation may drive nominal sales growth, the bank anticipates that a lower credit environment and increased consumer spending will bolster the company’s results.