Morgan Stanley has cut its price objective on JBS SA to $20.50 from $21.00, while leaving its Overweight rating intact. The revised target sits above the stock's trading level of $16.14 and is accompanied by research that suggests the shares are undervalued, with a Fair Value pointing to upside from current levels.
The firm expects JBS's fourth quarter of fiscal 2025 to be broadly resilient. Morgan Stanley models EBITDA of R$8.6 billion, roughly $1.6 billion, which the bank notes is consistent with consensus estimates. The research team does not view the quarter as likely to be a major catalyst for the stock.
At a market value of $17.9 billion, JBS is trading at what the bank characterizes as a low earnings multiple. Analysts referenced in the research anticipate revenue growth of about 23% for 2025.
Division-level expectations
- Seara (Brazil): Morgan Stanley projects top-line growth of about 4% year-over-year and a quarter-over-quarter EBITDA margin improvement on the order of 100 basis points, resulting in an estimated EBITDA of R$2.0 billion for the period.
- US Beef: The bank expects margins to be essentially unchanged quarter-over-quarter at negative 0.6% on a US GAAP basis. The research notes that this would nonetheless represent an outperformance relative to industry margins.
- US Pork and Australia: Results are forecast to be similar to third-quarter outcomes.
- JBS Brazil: Morgan Stanley anticipates a slower performance versus the prior quarter due to narrower export spreads.
Looking forward, Morgan Stanley forecasts strong free cash flow generation in 2026 with an approximate yield of 7% on the modelled numbers. The firm designates JBS as its preferred name within the Proteins sector and plans to monitor working capital trends as well as any updates on potential index inclusions during the company's fourth-quarter conference call.
Operational and market headwinds
In a separate operational development, JBS announced the permanent closure of its Swift Beef Company facility in Riverside, California. The shutdown will eliminate 374 jobs. The company attributed the decision to tight cattle supplies that have raised costs for meatpackers.
The report highlights broader supply pressures: U.S. cattle inventories have declined to multi-decade lows, contributing to record-high beef prices this year, and a pause in U.S. imports of Mexican cattle has further tightened available supply. Authorities have cited a need to prevent the spread of a flesh-eating parasite as the rationale for the import halt. These factors are presented as material constraints shaping JBS's regional operations and the decision to shutter the Riverside plant.
Context for investors
Investors will likely weigh the bank's moderate downward adjustment to the price target against the firm's continued Overweight stance and projected cash generation in 2026. Key near-term items to watch include working capital dynamics, margin progression across divisions, and management commentary on index inclusion and export spreads during the upcoming quarterly call.