Bank of America increases target prices for Vibra and Ultrapar and forecasts all-time high margins in the second quarter of 2026.
Summary
- Bank of America increased VBBR3’s target price from R $ 42 to R $ 43 and UGPA3’s target price from R $ 33 to R $ 34.
- The project aims to improve EBITDA margins to R $400 per cubic meter by the second quarter of 2026.
- Vibra has the potential to increase by 45% and is currently 31% higher than the existing quotes.
- The bank continues to favor Vibra Energy and recommends buying VBBR3.
- Industry standardization is anticipated in the third quarter as a result of the recent decline in oil prices.
Bank of America revised its projections for the Brazilian fuel distribution industry, resulting in increased target prices for Vibra Energia (VBBR3) and Ultrapar (UGPA3) stocks.
The update shows a more positive outlook for the second quarter of 2026 (2Q26).
The target price for Vibra increased from R $ 42 to R $ 43 per share after the review, and Ultrapar’s target price changed from R $ 33 to R $ 34.
The bank says the new figures indicate potential value increases of around 45% and 31% compared to current rates.
BofA remains optimistic about the industry.
The bank’s report mentions that it maintains a positive outlook for fuel distributors, backed by appealing evaluations, strong operational results, and a promising cash generation forecast.
Analysts predict that the second quarter could be one of the sector’s most robust periods, with Ebitda margins nearing a record level of around R $400 per cubic meter.
The BofA anticipates a return to typical margins in the third quarter following a decrease in oil prices, but it remains confident that profitability will remain strong.
Actions have not yet shown the anticipated improvement.
Even after the latest assessment, Vibra and Ultrapar’s stocks are still trading at levels similar to those seen before the tensions in the Middle East started in February.
BofA’s operating margins and cash generation improvements have not been fully recognized by investors.
The bank estimates that Vibra is valued at around 9.5 times its projected 2027 profit, while Ultrapar is valued at about 8.8 times.
Vibra is expected to have a free cash flow generation of 14%, while Ultrapar’s is expected to be 12%.
The operating situation continues to be advantageous.
The report also emphasizes the factors that are still advantageous for fuel distributors, in addition to the financial forecasts.
Diesel import prices are kept high due to low Russian fuel supply and rising logistic costs.
The BofA suggests that this situation could also support the freeing up of capital, enhancing companies’ cash flow and speeding up the process of reducing debt.
The bank’s top choice is Vibra.
Bank of America favors Vibra Energia’s actions and continues to recommend the purchase of VBBR3.
About 85% of the company’s projected Ebitda for 2027 is expected to be derived from the fuel distribution segment, compared to an estimated 60% contribution in Ultrapar, as stated by the bank.
Analysts believe that Vibra benefits from increased exposure in situations of demand growth or potential interest rate reductions.
BofA notes that certain issues affecting Ultrapar, like uncertainties regarding capital allocation and regulations in the LPG market, have become less significant in recent months, narrowing the gap between the two companies.
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