On Wednesday, CFRA announced a downgrade of Bunge Limited (NYSE:BG), a leading agribusiness and food company, from "Buy" to "Hold." Accompanying this downgrade, the firm also reduced its 12-month price target for Bunge's stock from $123 to $93. This adjustment reflects a significant decrease in the expected earnings per share (EPS) for the year 2024, dropping from the previously estimated $11.74 to $9.26. The revision comes in light of diminished soybean crush margins, which are anticipated to impact the company's profitability.
Bunge recently reported a stronger-than-expected performance for the fourth quarter, with earnings of $3.70 per share surpassing the consensus estimate of $2.80. However, the company's forecast for 2024 did not meet analysts' expectations, projecting an EPS of approximately $9.00 compared to the consensus of $9.67. Despite this, the guidance remains higher than Bunge's mid-cycle earnings baseline of $8.50 per share.
The company's outlook suggests a year-over-year decline in EPS of over 30%, which has contributed to CFRA's decision to lower its rating. The agricultural market, according to CFRA, is currently experiencing a more balanced supply and demand situation. This marks a significant shift from the previous years, where an imbalance favoring demand led to unusually high levels of inflation.
Bunge is still on track to finalize its acquisition of Viterra within the current year. In anticipation of this deal, Bunge has plans to repurchase an additional $400 million worth of its shares prior to the acquisition's completion, adding to the $600 million already bought back in 2023. Following the closure of the deal, the company intends to buy back another $1 billion in shares within 18 months.
InvestingPro Insights
Following CFRA's downgrade of Bunge Limited (NYSE:BG), a nuanced picture of the company's financial health is provided by InvestingPro data. Bunge's market capitalization stands at a robust $12.8 billion, reflecting its significant presence in the agribusiness sector. Despite recent challenges, the company's P/E ratio is currently 6.73, which is considered low compared to near-term earnings growth, indicating that the stock may be undervalued. An even more attractive figure is the adjusted P/E ratio for the last twelve months as of Q3 2023, which is 6.21.
InvestingPro Tips highlight that Bunge has been proactive in returning value to shareholders, notably by raising its dividend for 3 consecutive years and maintaining dividend payments for 24 consecutive years. Moreover, the company's liquid assets exceed short-term obligations, underscoring a solid financial position. Analysts predict the company will be profitable this year, with a profitability evidenced over the last twelve months. These factors could be of particular interest to investors considering long-term value and stability, despite the near-term headwinds reflected in CFRA's report.
The dividend yield as of the latest data is 2.94%, with a dividend growth of 6.0% in the last twelve months as of Q3 2023, which may appeal to income-focused investors. For those considering Bunge as a potential investment, it's worth noting that the stock is trading near its 52-week low, which might offer an entry point at a perceived discount.
For a deeper analysis and more insights, including additional InvestingPro Tips, interested readers can visit https://www.investing.com/pro/BG. There are 13 additional tips listed on InvestingPro that could provide further guidance. To access these insights, use coupon code SFY24 to get an additional 10% off a 2-year InvestingPro+ subscription, or SFY241 to get an additional 10% off a 1-year InvestingPro+ subscription.
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