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Investing.com - Canaccord Genuity downgraded Lavoro (NASDAQ:LVRO) from Buy to Hold on Friday, slashing its price target to $2.25 from $5.50 amid growing concerns about Brazil’s agricultural market conditions. The stock, currently trading at $2.15, has declined over 55% year-to-date, according to InvestingPro data.
The downgrade follows Lavoro’s suspension of guidance, creating uncertainty for investors despite the company’s efforts to extend payment terms with suppliers to accommodate farmers’ payment schedules.
Canaccord noted that while receivables collections from farmers for the April-May crop aligned with expectations, Brazil’s challenging financing environment and currency depreciation could create additional hurdles throughout the fiscal year.
The firm expressed concern about Lavoro’s payment arrangements with suppliers, which include plans to pay 10-40% of supplier claims using the company’s current input inventory starting in September 2025.
Canaccord’s revised $2.25 price target represents a 5.7x adjusted EBITDA multiple applied to its fiscal year 2026 estimate of $68 million for the agricultural inputs retailer.
In other recent news, Oppenheimer analysts downgraded Lavoro’s stock rating from Outperform to Underperform. This decision was influenced by concerns over tight credit conditions in Brazil and extended cash conversion cycles, which could affect the company’s near-term performance. The analysts noted that despite improved sentiment in the Brazilian agriculture sector due to stronger commodity prices, the challenges of high inflation, tight monetary policy, and an upcoming election cycle in Brazil present a cautious outlook for the next 6 to 12 months. Additionally, the analysts highlighted that Lavoro’s limited working capital capacity might restrict its ability to capitalize on increased end-user demand. As a result, the previous $5 price target for Lavoro stock has been removed. These recent developments reflect the specific financial and operational challenges Lavoro faces, despite broader sector improvements. The company’s future performance will depend on its ability to navigate these conditions effectively.
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