Vasta Platform Faces Financial Challenges: Sell Rating Due to Decline in B2G Sales and Underperformance

Analyst Mauricio Cepeda of Morgan Stanley maintained a Sell rating on Vasta Platform (VSTA – Research Report), boosting the price target to $4.20.

Mauricio Cepeda has given his Sell rating due to a combination of factors affecting Vasta Platform’s financial performance. The company experienced a significant decline in both its top and bottom lines, primarily due to a substantial drop in B2G sales, which fell by 92% year-over-year. This decline was anticipated as the previous year’s strong B2G sales created challenging comparisons. Additionally, while subscription revenue showed some growth, the complementary segment underperformed, coming in 21% below Morgan Stanley’s estimates.
Moreover, the company’s adjusted EBITDA decreased by 25% year-over-year, missing estimates by 12%, and margins fell by 700 basis points due to increased commercial expenses and an unfavorable sales mix. Although management expects margins to stabilize over the fiscal year, they anticipate weaker performance in the first half. The company’s net income also suffered, dropping 49%, and despite being above Morgan Stanley’s estimates due to lower interest expenses, it was still significantly below consensus expectations. These financial challenges contribute to the Sell rating, as they pose risks to the company’s ability to meet future performance targets.