With privatization, analysts estimate up to 85% upside potential for Eletrobras shares

With the Eletrobras privatization process in the process of being concluded, and the efficiency gains that may come with the electric energy company no longer under the control of the State, market analysts estimate that the shares on the stock exchange may appreciate in value. up to 85% in the coming months.

This Wednesday (8), the reserve period for investors interested in participating in the Eletrobras share offering ends, which should reduce the government’s participation from 70% to around 45%. The deadline to invest the FGTS (Fundo de Garantia do Tempo de Serviço) ended at 12 noon this Wednesday. See the next steps here.​

Even with the strong rise of around 30% of Eletrobras shares in the year, a good part precisely due to the expectation of privatization, analysts understand that there is still room for the appreciation to continue with strength.

Partner and analyst at asset manager Perfin, Marcelo Sandri says that, although the energy company’s shares focused on generation and transmission have already presented an outstanding performance, as efficiency gains start to materialize, in fact, the trend is of continued appreciation of the securities on the Stock Exchange.

“Eletrobras today is highly inefficient, from the perspective of costs in relation to the installed generation capacity, which is almost double the average of private companies in the sector. With privatization, the company should have the opportunity to reduce costs by half , or even more than that”, says Sandri, who counts on having in the company one of the main positions in the portfolio of stock funds of the manager.

He adds that Perfin intends to participate in the Eletrobras offer, with the expectation that the efficiency gains that will be observed in the day-to-day of the business will pave the way for the shares to continue the recent upward trend on the Stock Exchange.

Marcos Peixoto, manager of XP Asset, said in an interview at the end of May that Eletrobras was also one of the largest positions within the manager’s fund portfolios. The investment in the company was made in mid-2020, when the outbreak of the pandemic caused the prices of several assets to plummet.

Due to the relevant position occupied, Peixoto said that the manager was approached in mid-March to act as an anchor investor in the operation.

The minimum limit stipulated for investors to act as anchors and guarantee a firm demand of R$ 1.5 billion, however, was considered very high considering the volume of resources under management.

He understands that, given the recent results presented by Eletrobras in the first quarter, the shares should be quoted closer to the R$50 range, even without the conclusion of the privatization process.

With privatization, and with the potential efficiency gains being confirmed, the shares could reach levels around R$ 70 in the medium term, projected Peixoto.

Eletrobras shares were up 2.15% this Wednesday, around 1:25 pm, trading at R$ 42.68.

Therefore, Peixoto’s forecast includes an appreciation potential of approximately 64%. “There’s little privatization priced into the papers,” said the XP Asset manager.

Eleven Financial Research analysts project a target price of BRL 79 for Eletrobras shares in December, with an estimated upside potential of around 85%.

“With private ownership, we expect capital allocation and portfolio management to be geared towards value creation,” the experts at the investment analysis house say in a report.

They note that, in private companies in the sector, there is a more active assessment of their portfolios, with exchanges or divestments when a certain asset is not delivering a good performance.

“Additionally, we also see opportunity to better allocate capital to growth projects.”

With private control and as a market leader in both energy generation and transmission, Eleven’s analysts predict that Eletrobras can participate in a relevant way in the expansion of the system, leveraging its technical expertise and scale.

“In relative terms, we see Eletrobras trading at a discount in all multiples compared to the average of the multiples of generators and transmitters”, point out Eleven’s specialists.