BofA upgraded shares of StoneCo (STNE) to Buy from Neutral, raising the price target to $17 from $13 per share in a note Thursday.
Analysts told investors that Stone’s recently disclosed strategy for the next three years sounded much like the past four years.
It "aims to increase the monetization of its client base through the cross sell of banking, credit and software services, while continuing to gain market share in the MSMB segment," they explained.
"While the strategy did not play out as expected in the past four years (due to poor execution and challenging industry dynamics), there has been significant turnover in the management team (including a new CEO, CFO, Head of Credit, and Head of Technology) and there is an increased sense of urgency on costs, which we think should yield better results this time," they added.
The analysts also said that the company's 2024 guidance seems credible, and they have raised the rating on the stock and the price target based on the increased earnings estimates.
"While we are cognizant that the stock has rallied 25% in the past three days (following the release of stronger 3Q results, the announcement of a R$1.0bn buyback program, and upbeat
guidance at the Investor Day) we expect share performance over the next months to be supported by rising Consensus forecasts," they concluded.