BofA upgrades SLC Agrícola to neutral with a R$ 14.50 target

Bank of America raised its rating on SLC Agrícola shares from underperform to neutral on September 25, 2026, setting a price target of R$ 14.50. Analysts Isabella Simonato and Julia Zaniolo reported that the Brazilian agricultural sector is emerging from a three- to four-year downturn marked by depressed commodity prices and rising production costs.

Grain prices increased more than 20% over the past two months and gained over 30% year to date, driven by geopolitical conflicts, adverse weather in the United States, European crop stress, a strengthening El Niño, and shifts in futures market positioning. BofA expects grain prices to remain elevated in 2027, projecting corn to average $5.80 per bushel with 7% upside from current levels, and soybeans to average $13.30 per bushel.

Several factors limit SLC Agrícola's upside. With foreign exchange assumed at R$ 5.00 per dollar in 2027, every R$ 0.10 shift moves estimated EBITDA by 1.8%. About 50% of 2027 cotton and soybean output is hedged below current spot prices, while 40% of the 2026 cotton crop is locked at $0.75 per pound versus roughly $0.83 in the spot market. Corn production costs are also projected to increase 8.3% year over year.

SLC Agrícola's net debt is projected to climb from R$ 3.6 billion in 2024, or 2.0 times net debt to EBITDA, to R$ 6.1 billion in 2026, or 2.4 times leverage, following approximately R$ 2.25 billion in land acquisitions. BofA estimates a 2027 free cash flow yield of 6% and maintains a preference for rival 3tentos, which has a buy rating and a R$ 22.00 target.