The average target price of KRSA3.SA is 5.0 and suggests 44% downside potential. Usually, this means a SELL recommendation among investment firms, or a recommendation to decrease one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 5.0. This is lower than the current market price, meaning that even the most optimistic analyst does not see upside potential. On the other hand, the most pessimistic analyst has a target price of 5.0. This is equivalent to 44% downside potential in the worst case. 

Kora Saúde Participações S.A. owns and operates hospitals in Brazil. It has 11 hospitals in Espírito Santo, Tocantins, Mato Grosso, and Federal District. The company was founded in 2001 and is based in Vitória, Brazil.

Brazil

Kora Saúde Participações S.A.

Healthcare

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

KRSA3.SA reported revenue of BRL 2 268mn in the last 12 months, up 0% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 13% from FY23 to BRL -2.19. Market expects EPS to reach BRL 0.48 in FY25.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). The stock has outperformed this peer group by 117ppts over past six months and grown 4ppts slower in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is 'fair'.

The company has reported average EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 15.7% in the last 12 months, a decline from 17.8% in FY23. 

Historically, KRSA3.SA has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -8.2%, down from -7.4% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to -4.6%, below the peers. The consensus estimate for FY24 for RoCE is -2.2%, again behind the peers. 

Kora Saúde Participações S.A. reported a return on equity (RoE) of -20.7% in the last 12 months, down from -15.8% in FY23. The market consensus projects an RoE of 6.3% in FY24, again behind its peers. 

Another important profitability metric, return on assets (RoA), amounted to -3.9% in the last 12 months, a decrease from -3.6% in FY23. The market analysts predict that RoA will be 1.3% in FY24, again weaker than its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -0.4 in the past several years. This ratio implies a fragile shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

KRSA3.SA has very poor trading liquidity. It will take considerable time for the average private investor to sell a common position under normal market conditions. Liquidity is relatively stable and becomes extremely unfavourable on the days with the lowest activity. However, under highly turbulent market conditions, the trading volume tends to improve significantly. The stock has a very small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note resilient historical revenue growth, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, negligible return on capital, poor working capital management, weak debt servicing capacity, inadequate interest coverage, poor cash flow generation, and an unfavourable capital structure.

In highly turbulent market conditions, KRSA3.SA is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, KRSA3.SA is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

Based on key historical and expected multiples, the stock is greatly undervalued relative to its peers. Specifically, the stock is 'cheap' on P/E, neutral on EV/EBITD. 

Kora Saúde Participações S.A.

R$ 8.87

3

Kora Saúde Participações S.A.

R$ 8.87

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

R$ 8.87

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