On Thursday, BMO Capital Markets adjusted its outlook on shares of Bunge Limited (NYSE:BG), a global agribusiness and food company. Analysts at the firm lowered the price target to $110 from the previous $120 while maintaining an Outperform rating on the stock.
This revision follows Bunge's third-quarter earnings report, where the company posted earnings per share (EPS) of $2.29. This figure surpassed both BMO Capital's estimate of $2.16 and the consensus estimate of $2.14, driven by stronger profits in Merchandising and Refined sectors, coupled with reduced Corporate expenses.
Despite a slight underperformance in the Milling and Sugar segments, Bunge raised its 2024 EPS guidance to $9.25 and above from the prior forecast of approximately $9.25. This upward revision comes even after accounting for the impact of the sugar segment sale, which is estimated to affect earnings by about $0.35. BMO Capital also adjusted its 2024 EPS estimates to reflect the sugar business sale, while leaving its 2025 projections unchanged.
The price target adjustment to $110 is attributed to uncertainties in the current environment. However, BMO Capital believes that the risk/reward profile for Bunge shares is becoming increasingly positive. The firm's assessment is based on the shares trading below 10 times the 2025 pro forma EPS, considering current curves, and less than 8 times Bunge's EPS baseline.
Bunge's performance and BMO Capital's subsequent price target revision reflect a complex business environment. However, the firm's continued Outperform rating indicates a belief in the company's potential to navigate these challenges effectively.
In other recent news, Bunge Global SA's third-quarter earnings per share (EPS) for 2024 decreased, primarily due to costs associated 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. However, the company maintains a robust liquidity position and anticipates an adjusted EPS of at least $9.25 for the full year.
CFRA has reduced the price target for Bunge Limited from $109.00 to $90.00, maintaining a Hold rating on the stock. This decision was based on a new valuation of the shares at 9.0 times the estimated 2025 earnings per share (EPS) of $9.96, an increase from the previous estimate.
The pending acquisition of Viterra is now expected to close by the end of the year or early 2025, a delay from the prior guidance. This acquisition is anticipated to dilute Bunge's EPS in the first year, prompting a more cautious approach to the 2025 EPS projections.
In other company news, Bunge has repurchased $200 million in shares year-to-date, as part of its repurchase plan associated with the Viterra deal. These are the recent developments in Bunge, providing investors with a snapshot of the company's financial health and future plans.
InvestingPro Insights
Bunge Limited's recent financial performance and market position are further illuminated by data from InvestingPro. The company's P/E Ratio (Adjusted) of 8.06 for the last twelve months as of Q2 2024 aligns with BMO Capital's observation of shares trading below 10 times the 2025 pro forma EPS. This low earnings multiple is highlighted as an InvestingPro Tip, suggesting potential undervaluation.
Despite the challenges noted in the article, Bunge maintains a strong market presence. An InvestingPro Tip identifies it as a prominent player in the Food Products industry. This status is supported by the company's substantial revenue of $55.82 billion over the last twelve months as of Q2 2024, although it's worth noting a revenue decline of 12.5% during this period.
The company's dividend policy remains robust, with an InvestingPro Tip highlighting that Bunge has raised its dividend for 4 consecutive years. The current dividend yield stands at 3.17%, which may attract income-focused investors.
For readers seeking a more comprehensive analysis, InvestingPro offers 17 additional tips on Bunge Limited, providing a deeper understanding of the company's financial health and market position.
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