Cencosud Gains in Chile as UBS Raises to Hold After Slump

UBS AG ended its sell rating on Cencosud SA, Chile’s largest retailer by sales, saying the stock price’s 14 percent drop from an 11-month high in March already reflected increased risks to Argentine operations.

UBS raised its rating to the equivalent of hold and kept the price target unchanged at 2,900 pesos a share. The stock rose 0.1 percent today to 2,624.3 pesos at the close in Santiago. The benchmark Chilean Ipsa index retreated 0.8 percent.

In Argentina, “the macro situation is still challenging with price freezes, high inflation, rising labor costs” among other risks, Gustavo Piras Oliveira, an analyst at UBS, wrote in a note today. Even so, the stock is “already pricing in a sharp deterioration of results.”

Argentina accounted for 26 percent of Santiago-based Cencosud’s revenue in the fourth quarter, according to its most recent filing to Chile’s securities regulator. Cencosud’s shares have retreated 9.4 percent in the last three months, while its peer SACI Falabella has increased 1 percent in the same period and department store operator Ripley Corp SA has fallen 8.7 percent.

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