BRF Shares Drop Amid Mixed 4Q24 Results and Rising Costs

BRF (BRFS3), one of Brazil’s largest food companies, saw its shares fall over 5% on February 27, 2025, after releasing its fourth-quarter 2024 (4Q24) results.

The decline reflects investor concerns over rising production costs and shrinking margins, despite strong revenue growth and improved operational performance. Analysts offered mixed views on the company’s outlook, highlighting both opportunities and risks.

BRF reported net revenue of R$17.5 billion ($2.92 billion) in 4Q24, a 21.6% increase year-over-year (YoY). Adjusted EBITDA reached R$2.8 billion ($467 million), up 47.2% YoY but 6% lower than the previous quarter.

The EBITDA margin stood at 16%, an improvement from 13.2% in 4Q23 but below market expectations due to higher input costs. Corn prices rose by 11% quarter-over-quarter, while soybean oil costs increased by 15.6%. Labor expenses also contributed to cost pressures.

Despite these challenges, BRF achieved a record-breaking year in 2024, with annual revenue of R$61.4 billion ($10.23 billion), up 14% from 2023. Net income for the year reached R$3.7 billion ($617 million), marking the highest profit in the company’s history.

The leverage ratio improved significantly, with net debt-to-EBITDA dropping to 0.79x from 2.01x in the prior year. Analysts remain divided on BRF’s future prospects. Citi maintained a “buy” rating with a target price of R$32 ($5.33), citing strong sales growth (+16% YoY) and potential relief from falling soybean prices.

BRF Stock Outlook

XP Investimentos also recommended buying, setting a target price of R$30.10 ($5.02), supported by improving international markets and reduced U.S. competition in poultry exports.

However, caution persists among some analysts. BTG Pactual issued a neutral rating with a target price of R$25, warning that elevated market expectations may not align with the company’s current margin cycle.

Goldman Sachs adopted a neutral stance with a target price of R$27.20. The firm noted that adjusted EBITDA fell short of consensus estimates by 11%.

BRF’s management remains optimistic about future growth, emphasizing plans to expand its processed foods segment and leverage Brazil’s upcoming corn harvest (“safrinha”).

CEO Miguel Gularte highlighted stronger-than-expected sales in early 2025 and opportunities in international markets like Japan and the Middle East.

While BRF’s fundamentals remain solid, rising costs and shifting market dynamics pose challenges for sustained profitability. Investors must weigh its long-term potential against near-term risks.

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