Solar energy grows in Brazil; WEG is well positioned to capture gains – BofA
RIO DE JANEIRO, BRAZIL – In the search for new energy alternatives in Brazil amid the water crisis, the solar energy segment is gaining traction in the country and companies
like WEG (WEGE3) are well positioned to capture this expansion wave. The assessment is from Bank of America (BofA).
In a report published on Wednesday, July 21, BofA highlights that installed solar capacity in Brazil increased 55% in the first half of 2021 on a year-on-year comparison, and that the solar division has been one of WEG’s fastest-growing businesses in recent years, with a compound annual growth rate of 160% between 2017 and 2020.
“Thus, we estimate that the solar segment currenty represents 45% of the company’s sales, up from 5% in 2017. More importantly, we believe WEG is well positioned to remain a leading company in the solar power segment due to its national grid and distributed generation profile,” the analysts write.
The American bank highlights that it has been monitoring the solar energy industry’s evolution in Brazil and that although it is aware of its limitations, it believes it is a sector with good prospects for the medium and long term.
“WEG’s robust execution history in the energy sector bolsters our confidence that the company has the right strategy and product portfolio to adequately exploit the growth opportunities offered by renewables,” the analysis team says.
With its assessment that WEG continues to combine high growth, premium execution and strong earnings momentum, BofA reiterated its buy recommendation for WEGE3, with a target price of R$48, which implies potential upside of around 40% from Wednesday’s close.
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