Morgan Stanley has revised its outlook on Adecoagro (AGRO, Financial), reducing its rating from Equal Weight to Underweight. The financial services firm has also adjusted the stock's price target from $13 to $10. This downgrade comes as the firm reassesses the future liquidity of the shares, projecting a higher holding discount due to anticipated lower liquidity.
Despite the company's ownership of high-quality assets, generation of healthy free cash flow, and a robust balance sheet, concerns remain regarding the lack of clear intentions from the controlling shareholder, which could impede the stock's performance. Morgan Stanley foresees potential challenges ahead, citing irregular weather patterns potentially impacting cane yields and crop production, alongside anticipated pressure on ethanol prices.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 6 analysts, the average target price for Adecoagro SA (AGRO, Financial) is $12.22 with a high estimate of $17.00 and a low estimate of $10.00. The average target implies an upside of 23.15% from the current price of $9.92. More detailed estimate data can be found on the Adecoagro SA (AGRO) Forecast page.
Based on the consensus recommendation from 7 brokerage firms, Adecoagro SA's (AGRO, Financial) average brokerage recommendation is currently 3.0, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Adecoagro SA (AGRO, Financial) in one year is $12.20, suggesting a upside of 22.98% from the current price of $9.92. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Adecoagro SA (AGRO) Summary page.
AGRO Key Business Developments
Release Date: March 14, 2025
- Consolidated Adjusted EBITDA: $103 million for Q4 2024; $444 million for the full year 2024.
- Gross Sales: $368 million for Q4 2024; nearly $1.5 billion for the full year 2024.
- Net Cash from Operations: $161 million in 2024.
- Sugar, Ethanol and Energy Crushing Volume: 12.8 million tons in 2024, a record for the mills.
- Net Sales for Sugar, Ethanol and Energy: $178 million for Q4 2024; $680 million for the full year 2024.
- Adjusted EBITDA for Sugar, Ethanol and Energy: $105 million for Q4 2024; $364 million for the full year 2024.
- Adjusted EBITDA for Farming Business: $4 million for Q4 2024; $103 million for the full year 2024.
- Adjusted EBITDA for Rice Segment: $50 million for the full year 2024.
- Adjusted EBITDA for Dairy Segment: $8 million for Q4 2024; $34 million for the full year 2024.
- Distribution to Shareholders: $102 million in 2024, including dividends and share buybacks.
- Net Debt: $522 million, in line with the previous year.
- Liquidity Ratio: 4.5 times.
- Net Leverage Ratio: 1.2 times.
- Expansion CapEx: $104 million in 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Adecoagro SA (AGRO, Financial) achieved a consolidated adjusted EBITDA of $103 million in the fourth quarter and $444 million for the full year 2024, marking an 8% year-over-year increase.
- The company reported record results in its Rice and Dairy segments, driven by investments in production and asset consolidation.
- Adecoagro SA (AGRO) set new records in its Sugar, Ethanol, and Energy business, achieving a new crushing record and maximizing sugar production.
- The company distributed $102 million in dividends and share buybacks in 2024, exceeding its distribution policy by $32 million without compromising debt commitments or growth projects.
- Adecoagro SA (AGRO) generated $161 million in net cash from operations in 2024, demonstrating strong cash generation across its businesses despite challenges.
Negative Points
- The company faced a year-over-year loss in the mark-to-market of its biological assets in the Sugar, Ethanol, and Energy business.
- Net sales in the Sugar, Ethanol, and Energy business decreased by 22% year-over-year during the fourth quarter.
- The Crops segment reported a negative adjusted EBITDA of $3 million in the fourth quarter, impacted by lower international prices and higher costs.
- The company experienced lower-than-expected corn yields due to the impact of spiroplasma.
- Adecoagro SA (AGRO) faced challenges with dry weather conditions, which affected sugarcane yields and required strategic management of sugarcane harvesting.
