Valued at a market cap of $9.8 billion, Bunge Global SA (BG) is an agribusiness and food company. Its purpose is to connect farmers to consumers so that they can deliver essential food, feed, and fuel to the world. The Chesterfield, Missouri-based company operates through four segments: Agribusiness; Refined and Specialty Oils; Milling; and Sugar and Bioenergy.
Shares of this farm products company have significantly lagged behind the broader market over the past 52 weeks. Bunge has declined 23.5% over this time frame, while the broader S&P 500 Index ($SPX) has soared 22.7%. Moreover, on a YTD basis, the stock is down 9.8%, compared to SPX’s 4.5% rise.
Narrowing the focus, Bunge’s underperformance looks even more pronounced when compared to the Consumer Staples Select Sector SPDR Fund’s (XLP) 11.3% return over the past 52 weeks and 3.7% gain on a YTD basis.
On Feb. 5, shares of BG plummeted 6.9% after its Q4 earnings release as the company delivered adjusted earnings of $2.13 per share, which missed the Wall Street estimates by 7.4% and fell by a massive 42.4% from the year-ago quarter. Moreover, its revenue declined 9.4% year-over-year to $13.5 billion, primarily due to lower sales across most key segments. This disappointing performance was mainly driven by challenging market conditions in South America, which pressured industry margins. Additionally, higher corporate expenses fueled by performance-based compensation and project-related costs further weighed on the company's results.
For the current fiscal year, ending in December, analysts expect Bunge’s EPS to decline 13.6% year over year to $7.94. The company’s earnings surprise history is mixed. It surpassed the Wall Street estimates in two of the last four quarters while missing on two other occasions.
Among the seven analysts covering the stock, the consensus rating is a “Moderate Buy,” which is based on four “Strong Buy” and three “Hold” ratings.
This configuration is slightly less bullish than two months ago, with five analysts suggesting a “Strong Buy” rating.
On Feb. 11, BofA maintained a “Buy” rating on Bunge but lowered its price target to $87, which indicates a 24% potential upside from the current levels.
The mean price target of $88.38 represents a 25.9% upside from Bunge’s current price levels, while the Street-high price target of $115 suggests an upside potential of 63.9%.
