The average target price of QUAL3.SA is 2.4 and suggests 6% upside potential. Usually, this means a HOLD recommendation among investment firms. This neutral recommendation suggests no significant price movement, up or down, in the next 12 months. The most optimistic analyst has a target price of 4.0. This translates into 79% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 1.6. This is equivalent to 28% downside potential in the worst case. 

Qualicorp Consultoria e Corretora de Seguros S.A. operates as a healthcare benefits trader, administrator, and health management services provider in Brazil. The company was formerly known as Qualicorp S.A. and changed its name to Qualicorp Consultoria e Corretora de Seguros S.A. in June 2018. Qualicorp Consultoria e Corretora de Seguros S.A. was founded in 1997 and is headquartered in São Paulo, Brazil.

Brazil

Qualicorp Consultoria e Corretora de Seguros S.A.

Healthcare

The company pays dividends most of the time. It has paid dividends in almost every one of the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has barely been above zero and was substantially below that of its peers. At the same time, the average five-year yield has been significantly higher and exceeded nearly all its peers. On average, the company pays dividends annually. 

QUAL3.SA reported revenue of BRL 1 580mn in the last 12 months, down 10% 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 0.31 in FY25.

The stock's performance has been mixed in the past six months, with growth following a decline. The stock has outperformed its global peers from the same sector and industry (as shown above), surpassing them by 13ppts in total. 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 very strong EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 43.9% in the last 12 months, up from 41.5% in FY23. 

Historically, QUAL3.SA has reported weak net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 0.4%, a growth from -4.7% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 0.1% in the last 12 months, an increase from -1.8% in FY23. The market analysts predict that RoA will be 5.5% in FY24, again weaker than its peers. 

Qualicorp Consultoria e Corretora de Seguros S.A. reported a return on equity (RoE) of 0.5% in the last 12 months, up from -6.3% in FY23. The market consensus projects an RoE of 22.7% in FY24, this time above its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to 0.2%, below the peers. The consensus estimate for FY24 for RoCE is -22.0%, again behind the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.1 in the past several years. This ratio implies a weak 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.

QUAL3.SA has average trading liquidity. The average private investor can sell his common position in the stock in a single trading day. Liquidity is usually quite stable and remains extremely 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 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 robust profitability, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, slow historical revenue growth, negligible return on capital, excessive margin volatility, poor working capital management, and an unfavourable capital structure.

In highly turbulent market conditions, QUAL3.SA is volatile. In other words, the stock will fall much more than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be large. 

In normal market circumstances, QUAL3.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. We would also like to highlight the immense intraday volatility of the instrument. 

From both historical and forecast perspectives, the stock is underpriced compared to similar stocks. Specifically, the stock is fairly valued on P/E, undervalued on EV/EBITDA, underpriced on P/FCF. 

Qualicorp Consultoria e Corretora de Seguros S.A.

R$ 2.23

3

Qualicorp Consultoria e Corretora de Seguros S.A.

R$ 2.23

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

R$ 2.23

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