Natura Rises to Six-Week High as Credit Suisse Boosts Rating

Natura Cosmeticos SA (NATU3), Brazil’s biggest cosmetics maker, rose to a six-week high after Credit Suisse Group AG boosted its rating, citing cheaper valuations and the outlook for higher dividends than peers.

Natura gained 1.2 percent to 37.52 reais at 11:45 a.m. New York time and earlier touched 37.95 reais, the highest intraday price since July 13.

The stock had lost 22 percent this year through yesterday, pushing its valuation to 17.1 times Credit Suisse’s estimate for 2012 profit, a 20 percent discount to its historical average and 15 percent cheaper than global peers, according to an investor note yesterday. Credit Suisse projects a dividend yield for Natura of more than 5 percent next year, compared to less than 2 percent for most other consumer-goods stocks in Brazil, analysts Marcel Moraes and Antonio Gonzalez said.

“In spite of increased uncertainty with regards to the macroeconomic environment, we remain positive about the outlook for 2012,” the analysts wrote. “We expect some slight acceleration in the cosmetics, fragrances and toiletries market explained by some slowdown in the inflation rate and a record- high increase in the minimum wage.”

Prospects for slower economic growth and tighter competition spurred Credit Suisse to cut its 12-month share- price forecast for Natura by 8.6 percent to 42.50 reais. Brazil’s gross domestic product expansion will slow to 3.84 percent this year from 7.5 percent in 2010, according to the central bank’s latest weekly survey of economists.

“We believe changes in growth profile and increased competition should leave limited room for a rerating,” the analysts wrote. “We believe, nevertheless, that the worst was left behind.”

To contact the reporter on this story: Alexander Cuadros in Sao Paulo at

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

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