BR Malls Drops to Four-Month Low on Credit Suisse Cut

BR Malls Participacoes SA, Brazil’s biggest owner of shopping malls, dropped to a four-month low after Credit Suisse Group AG cut its recommendation to the equivalent of hold.

Shares fell 3.2 percent to 26 reais at the close of trading in Sao Paulo, the lowest since Sept. 14. The benchmark Bovespa index dropped 1.9 percent.

“The short-term outlook is less compelling than 2012 in terms of same store sales/same store rentals, especially for anchor stores,” Credit Suisse analysts including Guilherme Rocha wrote in a note published today in which they reduced their recommendation from the equivalent of buy. “Growth through mergers and acquisitions will be much tougher than in the last three years given higher prices, increasing competition, and quality of assets.”

Rio de Janeiro-based BR Malls has made at least 21 acquisitions since 2009, data compiled by Bloomberg show. It bought at least 39 shopping centers since late 2006, according to the company’s website. Sales in stores open at least one year rose 7.4 percent, while same-store rental revenue climbed 9.6 percent in 2012, the mall operator said in a Jan. 24 regulatory filing.

A press official at BR Malls didn’t respond to an e-mail message seeking comment.

BR Malls has gained 34 percent in the past year, compared with the Bovespa’s 4.4 percent decline. The company trades at 20 times analysts’ earnings estimates for the next four quarters, according to data compiled by Bloomberg.

The mall operator’s stock trades at a premium to the sector average, and its valuation “might not support outperformance in the short term,” the Credit Suisse analysts wrote.