Bloomberg News

Pao de Acucar Falls to Two-Week Low as Citigroup Cuts Rating

December 15, 2011

(Updates with closing prices in second paragraph.)

Dec. 15 (Bloomberg) -- Cia. Brasileira de Distribuicao Grupo Pao de Acucar, Brazil’s biggest retailer, fell to a two- week low as Citigroup Inc. cut its recommendation to “neutral” from “buy,” citing the stock’s valuation.

Shares dropped 2.6 percent to 64.49 reais at the close of trading in Sao Paulo, the lowest price since Nov. 29.

The outlook for Brazilian retailers in 2012 is “less bullish” than in 2011 as the economy slows, leaving “little upside” for Pao de Acucar, Carlos Albano, a Citigroup analyst based in Sao Paulo, wrote in a note to clients dated yesterday. “Recent stock performance brought valuations at much higher levels where we don’t see much room for multiple expansion.”

The stock trades at 28 times Citigroup’s 2011 earnings estimate for the company, more expensive than the ratio of 20.8 for smaller rival Cia. Hering, according to the research note.

--Editors: Glenn J. Kalinoski, David Papadopoulos

To contact the reporter on this story: Ney Hayashi in Sao Paulo at

To contact the editor responsible for this story: David Papadopoulos in New York at

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