Blau Farmaceutica (BLAU3.SA): Weaker operational momentum and distant from positive catalysts; tight valuation following recent outperformance; down to Sell

Research evidence excerpt

Blau Farmaceutica (BLAU3.SA): Weaker operational momentum and distant from positive catalysts; tight valuation following recent outperformance; down to Sell

Goldman Sachs Blau Farmaceutica (BLAU3.SA)

YTD stock outperformance implies relative valuation is stretched

The LatAm healthcare sector has been an underperformer YTD (-17% simple average vs

+10% for the Ibovespa), largely driven by the repricing of the long-term yield curve since

March/April amid geopolitical conflicts and local macro volatility. Although, we note that

Blau has outperformed its peers in the BZ Healthcare segment, which in our opinion was

warranted given the company’s light balance sheet—, and consequently, its limited

exposure to interest rates on the financial expenses line.

However, we now believe that the case may be more linked to BZ rates dynamics than we

previously anticipated, as the higher-for-longer rates environment appears to be

pressuring the operations via the credit stress and cautious receivables positioning

across the distributor channel as flagged above. This suggests Blau’s earnings are

more sensitive to the rate cycle than a single balance sheet view would suggest.

Additionally, we note that such stock outperformance led to YE26/27 9.5/7.6x P/E

for BLAU3, which we view as stretched considering uncertainties on operational

dynamics going forward and low stock liquidity (ADTV of BRL 3mn). Following the BLAU

model revisions, our 2026 and 2027 net income forecasts are now 8% below

consensus.

Exhibit 4: Long-end of the yield curve has been repriced Exhibit 5: YTD, BLAU3 has outperformed the LatAm

since March/April amid geopolitical conflict and local healthcare sector, mainly as the market has viewed the

macro volatility story as insulated from higher-for-longer rates dynamic in