BofA analyst Robert Ford Aguilar downgraded Companhia Brasileira de Distribuicao to Underperform from Buy with a price target of $2.80, down from $5. The company continues to face competition from ambulatory farmer’s markets and super fresh concepts in core trade areas as debt service and occupancy costs limit its ability to invest in value propositions, the analyst tells investors in a research note. The firm says Companhia Brasileira is struggling to offset lost scale, faces mounting competitive threats, and its contingency risk "appears to rise." BofA increasingly perceives Companhia’s Almacenes Exito spin-off as a value protection versus value creation strategy. The firm also sees further risk as Brazil authorities prioritize strategies to accelerate and settle outstanding tax litigation.
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