Itaú BBA Upgrades LWSA (LWSA3) to "Buy" – E-Commerce Growth "Taking Off"

• Why Itaú BBA Is Bullish on LWSA
• Margins and Cash Flow: The Bright Spots
• Valuation Gap: A Buying Opportunity?
• Risks and Final Thoughts
• FAQs

Itaú BBA has upgraded its recommendation for LWSA (LWSA3) from "Neutral" to "Buy," raising the target price from R$4.90 to R$6.20. The bank highlights the company's accelerating e-commerce revenue growth and improved cash Flow as key drivers. Despite a 2.25% dip in share price to R$4.35 on December 16, 2025, analysts remain bullish on LWSA's streamlined operations and monetization strategy. With margins expanding and fiscal efficiencies in play, the stock trades at a discount compared to peers, offering upside potential.

Why Itaú BBA Is Bullish on LWSA

Itaú BBA's upgrade of LWSA (formerly Locaweb) reflects confidence in its turnaround story. The bank notes that LWSA's e-commerce revenue grew 16.6% YoY in Q3 2025, up from 8.5% a year earlier—a sign that its focus on Core assets like Bling, Tray, and Wake is paying off. "LWSA surprised us positively," says Maria Clara Infantozzi, lead analyst at Itaú BBA. The sale of non-core assets (Squid and Nextior) freed up capital and management bandwidth, further boosting margins.

Margins and Cash Flow: The Bright Spots

LWSA's adjusted EBITDA margin improved to 20.5% in Q3 2025 (vs. 19.6% in Q3 2024), with further expansion expected to 23.5% by 2026. The bank also projects an 11% increase in net revenue to R$1.58 billion, excluding divested businesses. Fiscal benefits from amortizing past acquisition premiums add R$121 million in net present value (NPV), supporting cash flow.

Valuation Gap: A Buying Opportunity?

Despite operational improvements, LWSA trades at a 58% discount to global peers on a non-GAAP P/E basis. Itaú BBA attributes this to market skepticism but argues the gap is overdone: "A modest closing of this gap could drive significant upside." The bank's revised target price of R$6.20 implies ~42% upside from current levels.

Risks and Final Thoughts

While LWSA's focus on high-margin segments is promising, execution risks remain—especially in cross-selling and upselling. That said, with e-commerce "taking off" and fiscal tailwinds, the stock looks poised for re-rating. As always, do your own research.