StoneCo Stock Is Spiking Despite Q4 Earnings: What Does This BofA Analyst Think?

Although StoneCo Ltd STNE reported its non-GAAP net income 48% below Street expectations, its operating trends reflected better revenue generation on robust TPV growth, take rate expansion and lower administrative expenses, according to BofA Securities.

The StoneCo Analyst: Mario Pierry reiterated a Neutral rating for StoneCo, with the price target unchanged at $20.

The StoneCo Thesis: The company’s bottom line was impacted by higher financial expenses, due to higher market rates, Pierry said in the note.

“All in, non-GAAP net margin contracted to 1.8% from 9.0% in 3Q21,” he added.

The analyst mentioned that management guided to margin expansion through 2022 and “solid EBT growth in 1Q22,” while announcing a corporate restructuring that separates the Software and Financial verticals.

“The verticals will be managed with greater focus by separate COOs, and their financials will be disclosed separately to improve transparency. We welcome such changes given the increased complexity of the segments,” he further wrote.

STNE Price Action: Shares of StoneCo had spiked 36.63% to $13.13 at the time of publication Friday.