Ibovespa highlights in April

After spending another month in the red with a drop of 1.7% in April, the Ibovespa has already accumulated a devaluation of 6.15% in 2024.

In the month, the biggest falls were mainly concentrated among consumer and retail stocks, which were impacted by the scenario of higher interest rates for longer in the USA, which also led part of the market to review Selic projections here. The month was one of significant falls for the shares that make up the Stock Exchange benchmark, with 5 of them recording a drop of at least 20%.

Among the biggest rises, the sectors are more diversified, with emphasis on an illustrious one known to investors: Petrobras (PETR3;PETR4). During the month, only five Ibovespa shares rose more than 5%.

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Check out the biggest highlights of Ibovespa’s rise and fall in April:

Biggest casualties

CVC (CVC3) and Azul (AZUL4): drops of 30.69% and 25.23%

The falls of CVC and Azul can be explained by a series of factors, the main one being the rise in the dollar. The American currency soared in April, reaching its highest level in almost six months during the month. In addition to the market’s projection that interest rate cuts (notably in the USA) will take longer to happen, the wave of pessimism that raised the American currency during the month was also related to geopolitical tensions, following Iran’s attack on Israel. The currency came to relief at the end of April, but closed the last session of the month on a high awaiting the May meeting at the Federal Reserve – next Wednesday (1), when the Brazilian Stock Exchange will be closed.

In the case of Azul, as highlighted by Enrico Cozzolino, partner and head of analysis at Levante Investimentos, the aviation business already operates with very low margins. Therefore, foreign currency fluctuations cause repercussions quickly, considering the cost of 40% of revenue directly from kerosene. CVC, in turn, had already suffered a sharp drop in shares after the release of the balance sheet for the fourth quarter of 2023 at the end of March. The company’s shares fell 6.48% with the presentation of the results and are still undergoing restructuring.

Magazine Luiza (MGLU3) and Grupo Soma (SOMA3): drops of 24.44% and 20.24%

Future interest rates (DIs) rose for several weeks at the beginning of April, in reaction to data such as higher-than-expected payroll (which discouraged the market in relation to rate cuts in the US) and fiscal data considered bad in Brazil. The scenario of risk aversion plus the rise in the dollar had a major impact on some retail names, such as Magazine Luiza (MGLU3), Grupo Soma (SOMA3) and Arezzo (ARZZ3), the latter not appearing in the “top 5”, but still among the biggest drops in the month, down 19.22%.

On the companies’ radar, Magalu also announced the approval of the capital increase of R$ 1.25 billion and the grouping of shares from 10 to 1 in the previous month. “Magazine Luiza does not have the best risk-return ratio. It recently raised money, it faces the same problem as the fragmented sector, as clothing retailers, among others, and this risk-return relationship, added to global geopolitical risk aversion, causes assets to deteriorate”, comments Cozzolino .

.Investors from Arezzo and Grupo Soma are still keeping an eye on the developments of the merger. Itaú BBA pointed out that the shares of the combined company have the potential to increase in value by up to 40%. Even so, all three skidded in April, driven by the domestic and foreign macroeconomic scenario, while some analysts also see challenges for the operation.

LWSA (LWSA3), formerly Locaweb: down 21.23%

Part of another sector that has a strong correlation with interest rates, technology and telecommunications names fell in April, such as LWSA, formerly Locaweb. The biggest drops in the name occurred on the days when the dollar peaked during the month. Furthermore, Bank of America (BofA) estimated, in a report on 1Q24 results, that the company should present weaker numbers, with net revenue showing 5% growth compared to the same period in 2023. The foreign bank also reduced the target price for the company from R$7.5 to R$6. Some analysts were betting that the 4Q23 result could be a turning point for the company and the name rose 5.52%. However, this was not what happened and the company continued to decline in April.

Check out the biggest drops in Ibovespa in April:

Biggest highs

Petrobras (PETR3;PETR4): increases of 18.65% and 15.57%

The month of April was quite turbulent for Petrobras, but it also brought a lot of relief to investors. The beginning of the month brought new rumors that the command of the CEO of the state-owned company, Jean Paul Prates, was in question and that names that did not have the market’s approval, such as the president of BNDES, Aloizio Mercadante, were being considered for the position. However, the rumors dissipated, at the same time that new rumors that Lula’s ministers would seal an agreement for the payment of extra dividends from Petrobras caused the shares to revive again.

The scenario of greater relief for investors came to fruition after the Petrobras shareholders’ meeting on the 25th, with the approval of the payment of 50% of the extra dividends (around R$22 billion, or US$4.4 billion), while the The federal government’s vote also signaled that Petrobras’ management could decide by the end of the year (December 31, 2024) to pay another remaining 50% of the dividend reserve, which signals that more may be to come. As a result, analysis houses once again became more optimistic about the state-owned company, such as Bradesco BBI, which raised its recommendation for PETR4 shares from neutral to equivalent to purchase at the end of the month.

IRB (IRBR3): advance of 13.73%

The recovery of the IRB remains ongoing. The company released its results for the fourth quarter of 2024 (4Q23) at the end of March and with repercussions in April, making a profit of R$38 million and reversing losses from the same period in 2022. In a conference call with analysts, the IRB board returned to envisage the possibility of distributing dividends next year. The company’s CEO, Marcos Pessôa de Queiroz Falcão, said that the company still has accumulated losses but, if it returns to consistent profits by the end of 2024, the distribution of earnings should be resumed. Despite not indicating guidance for 2024, the IRB estimate is to increase this year’s premiums by around 10%.

JBS (JBSS3): advance of 9.02%

With expectations of operational improvements after difficult quarters, JBS appears as one of the main highlights of share gains in April. At the beginning of the month, Bank of America raised the target price for the stock from R$33 to R$35 when reviewing the model also taking into account the numbers for the fourth quarter of 2023 (4Q23). The bank considered that the company is heading towards a “strong recovery in profits in 2024”. BofA’s optimism with the slaughterhouse comes from the absence of “yellow signs for 2024”, even though the performance presented in 4Q23 fell short of expectations. Still, the message given by management was enough for the bank to consider it constructive, especially in relation to Seara.

For 1Q24, Itaú BBA highlighted that, although regular seasonality normally leads to sequential margin compression in the first three months of the year, operational improvements should benefit JBS this time. Seara, PPC and Australia are expected to post the strongest results within the platform, while the US Beef division continues to be the main detractor of consolidated margins (although not to the same extent as seen in the last quarter).

Petz (PETZ3): up 8.28%

After months of speculation about consolidation in the pet retail market, April marked the news of the advance of the merger of Cobasi with Petz, the latter of which is publicly traded and which soared on the stock exchange after the release of more details about the business combination. rising 37% in the trading session on the 19th alone. In a report after the announcement, Bradesco BBI highlighted that the price at which Petz was valued was R$7.10 per share – more than 100% above the closing price before the merger announcement, of R$3.50 – was the positive highlight. Genial assessed that the merger will create a dominant player in the pet sector, at a time when competition is increasingly fierce – potentially alleviating competition pressures and making pricing more rational, in addition to bringing other significant synergies of growth and efficiency for the combined business.

Check out the biggest rises in Ibovespa in April: