Chesterfield, Missouri-based Bunge Global SA (BG) operates as an agribusiness and food company that produces and supplies plant-based oils, fats, and protein. Valued at $14.2 billion by market cap, the company’s products are used in a wide range of applications, such as animal feed, cooking oils, and flours, as well as bakery and confectionery, dairy fat alternatives, plant-based meat, and infant nutrition.
Shares of this global agribusiness and food company have underperformed the broader market considerably over the past year. BG has declined 10.7% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 27.5%. In 2024, BG stock is down marginally, while SPX is up 17.8% on a YTD basis.
Narrowing the focus, BG has also lagged behind the VanEck Agribusiness ETF (MOO). The exchange-traded fund has declined about 10.3% over the past year. However, BG’s marginal decline on a YTD basis outshines the ETF’s 3.9% losses over the same time frame.
BG's weak price performance can be attributed to lower crushing margins as the world's largest oilseed processor. Abundant global supplies of soybeans and corn have led to low crop prices, reducing farmer incentives to sell. This has pressured merchants and processors like BG, as buyers cut inventories and farmers hold onto their supplies, creating an uncertain outlook for the company for the rest of the year.
On Jul. 31, BG shares closed down more than 8% after reporting its Q2 results. Its adjusted EPS of $1.73 fell short of Wall Street expectations of $1.79. The company’s revenue was $13.2 billion, missing the consensus estimates of $14.2 billion. BG expects full-year adjusted EPS to be $9.25.
For the current fiscal year, ending in December, analysts expect BG’s EPS to decline 31.9% to $9.30 on a diluted basis. The company’s earnings surprise history is mixed. It beat the consensus estimate in three of the last four quarters while missing the forecast on another occasion.
Among the nine analysts covering BG stock, the consensus is a “Moderate Buy.” That’s based on five “Strong Buy” ratings and four “Holds.”
This configuration is less bullish than a month ago, with six analysts suggesting a “Strong Buy.”
On Aug. 1, Citigroup Inc. (C) analyst Thomas Palmer downgraded BG to a “Hold” rating with a price target of $114. He highlighted challenges in the agricultural industry, including increased capacity in North America's crush industry and weak demand growth from the U.S. biofuels sector, which could pressure earnings. Palmer also expressed reservations about the pending Viterra acquisition, noting it may not be as beneficial as expected due to a less favorable margin environment.
The mean price target of $114.11 represents a 13.4% premium to BG’s current price levels. The Street-high price target of $129 suggests an upside potential of 28.2%.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
