Logista: I Might Have Been Wrong (Rating Downgrade)

2025-02-13 10:27:28 ET

Summary

• I initiated coverage for Logista Integral, S.A. with a buy rating, but since then, low OTC volume has hindered its stock movement; it outperformed the S&P 500 in Euros but underperformed after forex effects.
• Logista specializes in transporting tobacco, pharmaceuticals, and other products in Western Europe, with a low-margin business model and exposure to macroeconomic risks.
• Q1 FY25 earnings showed 4% revenue growth, driven by Iberia's tobacco sales, but overall low growth and declining tobacco volumes highlight the need for diversification.
• CDNIF stock is downgraded to hold due to low growth expectations, despite low debt and positive free cash flow; acquisitions are crucial for future growth.

In October 2024, I initiated coverage for Logista Integral, S.A. (CDNIF) . While I have a buy rating on the stock, the CDNIF ticker did not move. I attribute that to the low volume on the OTC market. The listing in Madrid (LOG) gained 6%, which absent of volume issues on the OTC listing would have resulted in a 1.6% gain after forex effects would have been considered. So, the stock denominated in Euros has outperformed the 3.3% return of the S&P 500, but after factoring in the currency exchange rates, it has underperformed even if you had bought at the more liquid listing in Madrid. In this report, I will be discussing the most recent earnings and I will provide an update on the price target....

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