Cencosud Falls in Chile After UBS Says Sell on Valuation

April 2 (Bloomberg) -- Cencosud SA, Chile’s largest retailer by sales, posted its longest losing streak in four months after UBS AG recommended selling the stock, citing high valuation and currency risks.

Shares retreated 2.3 percent to 2,836 pesos at the close in Santiago in its sixth day of declines, the longest stretch of losses since Nov. 30. The Ipsa benchmark index of stocks fell 0.4 percent.

UBS cut its recommendation for Cencosud to sell from neutral and lowered its price target to 2,900 pesos from 3,170 pesos, according to in an e-mailed report to clients. The retailer trades at higher valuations than regional peers with better returns on invested capital and lower leverage, according to UBS.

“Cencosud is highly exposed to Argentinean currency risks and faces high execution risks in Brazil and Colombia,” UBS analyst Gustavo Piras Oliveira wrote in the note.

Cencosud trades at 21 times estimated earnings for the next 12 months and has a return over invested capital of 6.9 percent, compared with an average 11 percent for Latin America retailers, according to data compiled by Bloomberg.

To contact the reporter on this story: Eduardo Thomson in Santiago at ethomson1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net