JPMorgan reviews transportation sector targets and prefers Motiva and Rumo after electoral turmoil
Bank reviews recommendations from Brazilian companies, increases cost of capital by 2 to 2.5 percentage points and cuts target prices by an average of 36%.
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM INFOMONEY · 2 MIN
JPMorgan reviewed recommendations on Brazilian companies in the transportation sector and recalibrated its projections for December 2027. According to InfoMoney, the change of route was motivated by strong turbulence in the markets following the results of the presidential elections.
In practice, the bank increased the cost of equity capital of covered companies by 2 to 2.5 percentage points. As a result, target prices for December 2027 were reduced, on average, by 36%. The cost of equity capital is the minimum remuneration that shareholders require to keep their money in the company, and an increase in this indicator tends to reduce the estimated value of shares in valuation models.
Among the preferred shares, the bank cited Motiva (MOTV3) and Rumo (RAIL3). Vamos (VAMO3), on the other hand, had its recommendation downgraded from purchase to neutral. The difference in treatment between the papers shows that the review was not uniform within the sector.
The background is a recurring theme in election years: the perception of the conduct of public accounts usually weighs on the risk premium demanded by investors. For infrastructure and logistics companies, which depend on long-term investments, this point gains additional weight in projections.
JPMorgan's movement, therefore, is not limited to a one-off adjustment of target prices. It reflects a reassessment of the risk associated with the sector after a period of strong volatility, with different effects depending on each company.
What changes for the investor
For those who follow the sector, the review indicates that the value reference for companies covered by the bank has become lower, with a higher cost of capital. This does not, in itself, mean a direction for quotes. It is worth observing how the cost of capital evolves in the next market readings and how each company responds to the new scenario, as the report itself separates preferred names from downgraded stocks.
Automatically translated from Portuguese.
