Canaccord Downgrades Lavoro Stock on Brazil Agriculture Market Concerns
In a move that marks a shift in its outlook for Brazil’s agriculture sector, Canaccord Genuity has downgraded Lavoro (NASDAQ: LVRO) stock from “buy” to “hold” and slashed its price target from $5.50 to just $2.25.
📉 Pressure from Brazil’s economic conditions
LVRO shares, currently trading around $2.15, have fallen more than 55% since the start of the year, according to data from InvestingPro. The downgrade comes after Lavoro announced it was suspending its financial guidance, adding to investor uncertainty.
While the company has attempted to adjust its payment schedule with suppliers to align with farmers’ harvest schedules, Canaccord warns that the challenging financial environment and the devaluation of the Brazilian real could continue to weigh on its operations.
🧾 Specific payment and working capital risks
Another notable point is Lavoro’s plan to pay 10–40% of its supplier debt with inventory starting in September 2025. This strategy, while temporary, raises concerns about the company’s liquidity and long-term capital structure.
The new $2.25/share price target reflects a 5.7x EV/EBITDA valuation, applied to a fiscal 2026 EBITDA estimate of around $68 million, a sign that Canaccord is taking a significantly more cautious view than previously.
🧠 Consensus View from Oppenheimer
Not only Canaccord, Oppenheimer also recently downgraded LVRO from “Outperform” to “Underperform”. The reasons? Tight credit in Brazil, long cash conversion cycles and macro risks are clouding the company’s near-term outlook.
Despite some improvements in agricultural commodity prices, Oppenheimer analysts still emphasize that:
High inflation
Tight monetary policy
Brazil’s election cycle
…are factors that will continue to cause significant volatility over the next 6–12 months.
🔍 Outlook: Cautious but not entirely negative
While Brazil’s agricultural sector has some positive signs, Lavoro’s ability to capitalize on market opportunities will be limited by weak working capital and rising financial pressures.
Currently, previous higher price targets such as $5/share are being completely removed from the analysis models, reflecting a more defensive and cautious strategy from analysts.
📈 Investment Perspective
In this volatile environment, investors need to consider operational risks, exchange rates, and the macro environment before increasing their exposure to LVRO. However, some analysis tools such as ProPicks AI can still detect potential long-term investment opportunities in undervalued stocks such as Lavoro if the company recovers quickly from the current period of uncertainty.