Tuesday, Oppenheimer adjusted its outlook on shares of Lavoro (NASDAQ:LVRO), reducing the price target to $9 from the previous $11, while maintaining an Outperform rating. The firm's analyst pointed out that Lavoro's third fiscal quarter results, ending in March, didn't meet expectations due to a shift towards just-in-time purchasing and delayed grain sales, which are expected to affect the timing of sales and receivables into fiscal year 2025.
The disappointing third-quarter performance and the anticipated fourth-quarter shipment schedule have led to a lower revenue guidance for fiscal year 2024 by $275 million at the midpoint. However, a recovery of a portion of these revenues is anticipated in the first half of fiscal year 2025.
Despite the lowered revenue forecast, Oppenheimer highlighted Lavoro's volume growth, which indicates market share gains when compared to the industry's lower single to mid-single digit growth. Lavoro's input volume growth ranged from 20% to 45%, showcasing the company's competitive edge.
The analyst also noted the positive aspects of Lavoro's diversified portfolio and the expectation of cycling through its higher-cost inventory. This is anticipated to support an improvement in gross margins in the second half of fiscal year 2025. Following these observations, Oppenheimer has revised its estimates and lowered the price target for Lavoro's stock.
InvestingPro Insights
As Lavoro (NASDAQ:LVRO) navigates a challenging fiscal period, real-time data from InvestingPro provides a clear picture of the company's current financial health and market position. With a market capitalization of $735.01 million, Lavoro's negative P/E ratio of -5.65 reflects its ongoing struggles to achieve profitability. The adjusted P/E ratio for the last twelve months as of Q2 2024 is even lower at -7.09, indicating that investors are cautious about the company's earnings potential.
Despite these challenges, Lavoro has experienced a significant return over the last week, with a 1-week price total return of 8.92%. This volatility is characteristic of Lavoro's stock, which InvestingPro Tips highlight as generally trading with high price volatility. Additionally, the company is recognized as a prominent player in the Trading Companies & Distributors industry, which may offer some stability in terms of market presence.
InvestingPro Tips also reveal that Lavoro is trading at a low revenue valuation multiple and that analysts do not anticipate the company will be profitable this year. Moreover, Lavoro does not pay a dividend to shareholders, which may influence investment decisions for those seeking regular income. For readers looking to delve deeper into Lavoro's financials and market prospects, there are additional tips available on InvestingPro. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and explore the wealth of analysis that InvestingPro offers.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.