On Wednesday, CFRA announced a reduction in the price target for Bunge Limited (NYSE:BG) from $109.00 to $90.00, while maintaining a Hold rating on the stock. The firm's analyst justified the decision based on a new valuation of the shares at 9.0 times the estimated 2025 earnings per share (EPS) of $9.96, which is an increase from the previous estimate of $9.94. The 2024 EPS projection was also raised to $9.49 from $9.29.
The revised price target reflects a discount to the long-term average price-to-earnings ratio of 12 times. The analyst pointed out that the adjusted EPS for the third quarter was $2.29, showing a 23% decrease year-over-year, but still exceeding expectations by $0.14. Additionally, Bunge has updated its 2024 EPS guidance to a minimum of $9.25, up from the earlier flat rate of $9.25.
The CFRA report also notes the pending acquisition of Viterra, which is now anticipated to close by the end of the year or early 2025. This is a delay from the prior guidance that projected a year-end closing. The acquisition is expected to dilute Bunge's EPS in the first year, prompting a more cautious approach to the 2025 EPS projections.
The analyst's remarks included observations about the current state of crush margins, which are generally strong across most regions, with China being a notable exception. However, the report also acknowledged the presence of risks and uncertainties affecting both supply and demand. Particular attention was drawn to the potential impact of the upcoming U.S. election on biofuel demand, which could influence market dynamics.
In other recent news, Bunge Global SA reported a decrease in third-quarter earnings per share (EPS) for 2024, primarily due to costs linked with its pending merger with Viterra and a mark-to-market timing difference. Bunge's adjusted EPS fell to $2.29 from $2.99 in the same quarter last year, with net earnings per share down to $1.56 from $2.47. Despite the decline, the company maintains a robust liquidity position and anticipates an adjusted EPS of at least $9.25 for the full year.
The Viterra transaction is anticipated to close by late 2024 or early 2025, following conditional clearance from the European Commission. Bunge's adjusted EBIT for the quarter was $561 million, down from $735 million in the previous year. The company has repurchased $200 million in shares year-to-date, as part of its repurchase plan associated with the Viterra deal.
These are some of the recent developments at Bunge. The company expects a stronger third quarter but lower results compared to the previous year. The adjusted annual effective tax rate is projected to be between 22% and 24%, with net interest expense expected between $285 million and $305 million. Capital expenditures are anticipated in the upper range of $1.2 billion to $1.4 billion.
Despite the short-term costs of strategic growth initiatives, Bunge is poised for long-term growth, supported by a solid liquidity position and ongoing investments in its core businesses.
InvestingPro Insights
Adding to CFRA's analysis, recent InvestingPro data provides further context on Bunge Limited's financial position. The company's P/E ratio stands at 9.6, aligning closely with CFRA's valuation of 9.0 times estimated 2025 earnings. This relatively low earnings multiple is highlighted as an InvestingPro Tip, suggesting potential undervaluation.
Despite the reduced price target, Bunge's financial health appears robust. The company boasts a dividend yield of 3.1% and has raised its dividend for 4 consecutive years, as noted by InvestingPro Tips. This consistent dividend growth may appeal to income-focused investors, especially given the current economic uncertainties.
However, investors should be aware that Bunge's revenue declined by 12.5% in the last twelve months, which could explain the more cautious outlook. This aligns with the InvestingPro Tip indicating that analysts anticipate a sales decline in the current year.
For those seeking a deeper dive into Bunge's financials and prospects, InvestingPro offers 16 additional tips, providing a comprehensive view of the company's strengths and challenges in the current market environment.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.