The average target price of ONCO3.SA is 5.2 and suggests 3% 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 9.0. This translates into 68% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 2.0. This is equivalent to 63% downside potential in the worst case. 

Oncoclínicas do Brasil Serviços Médicos S.A. provides medical services focused on clinical oncology and radiotherapy in Latin America. It offers services in the areas of chemotherapy, radiotherapy, hormone therapy, molecular target drugs, immunotherapy, bone marrow transplant, catheter heparinization, non-oncological infusions, laser therapy, myelogram - bone marrow biopsy, continuous care, and precision medicine. The company was founded in 2010 and is based in São Paulo, Brazil.

Brazil

Oncoclínicas do Brasil Serviços Médicos 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. 

ONCO3.SA reported revenue of BRL 6 227mn in the last 12 months, up 13% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. Market expects EPS to reach BRL 0.11 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 30ppts over past six months and grown 2ppts 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 modest EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 4.2% in the last 12 months, a decline from 20.6% in FY23. 

Historically, ONCO3.SA has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -10.4%, down from 4.1% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to -6.3% in the last 12 months, a decrease from 2.6% in FY23. The market analysts predict that RoA will be 0.7% in FY24, again weaker than its peers. 

Oncoclínicas do Brasil Serviços Médicos S.A. reported a return on equity (RoE) of -23.7% in the last 12 months, down from 10.1% in FY23. The market consensus projects an RoE of 2.6% in FY24, again behind its peers. 

In the last 12 months, the return on capital employed (RoCE) declined to -8.0%, below the peers. The consensus estimate for FY24 for RoCE is 3.2%, again behind the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -0.2 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.

ONCO3.SA has above average trading liquidity. The average private investor can sell his common position in the stock almost immediately. Liquidity is usually stable and remains favourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a 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, ONCO3.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, ONCO3.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. 

From both historical and forecast perspectives, the stock is moderately underpriced compared to similar stocks. In particular, the stock is reasonably priced on P/E, of fair value on EV/EBITD. 

Oncoclínicas do Brasil Serviços Médicos S.A.

R$ 5.42

3

Oncoclínicas do Brasil Serviços Médicos S.A.

R$ 5.42

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

R$ 5.42

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