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WEG Shares Rise After Positive Results and Possible Partnership with SpaceX
WEG shares have been on an upward trajectory since the release of its second-quarter results for 2023. Since then, the stocks have continued to rise, reaching a cumulative gain of 18.15% from July 18 until the close of this Monday (24). According to InfoMoney, the shares turned positive for the year, registering cumulative gains of 9.19%. This performance, along with the announcement of the partnership with SpaceX, has made WEG shares stand out as leaders in gains on the Ibovespa.
The excellent performance of WEG shares exceeded already optimistic projections. The positive highlight was revenue in the international market, which grew 25% in a year, with significant increases in North America (21%) and Europe (48%).
The good performance of shares in the international market was driven by solid demand for short-cycle industrial electro-electronic equipment, especially in North America, and by Transmission and Distribution (T&D) projects in that region, with sales of transformers for wind and solar power parks. Additionally, WEG achieved a surprising profitability due to lower input prices, a favorable mix, and productivity improvements.
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Revisions of Projections and Potential Appreciation
In response to the solid results, several firms have revised their projections for WEG upward. Bradesco BBI, despite a neutral recommendation, raised the target price by 3%, from R$ 38 to R$ 39, representing a value 6% lower than Monday’s close.
Meanwhile, JPMorgan, with an overweight recommendation, increased the target price from R$ 47 to R$ 50, reflecting a potential appreciation of 20% relative to Monday’s close. JPMorgan highlights the capacity of WEG to exceed expectations, positive prospects for the T&D market in North America, and the historic discount in valuation as factors supporting the recommendation.
Possible Partnership with SpaceX Drives Shares
According to Jovem Pan (07/24), Brazilian WEG, the world’s largest manufacturer of electric motors, was allegedly selected by billionaire Elon Musk to supply motors for SpaceX. This is because the propulsion motors of the company’s rockets consume a large amount of oxygen. Thus, SpaceX would work on creating a self-production unit for the gas to avoid purchasing the product.
SpaceX would use WEG motors in offshore oxygen production platforms, coupled with compressors used in air separation mechanisms, which are one of the fundamental components of rockets. According to Jovem Pan, the decision to choose WEG was based on the quality of the motors and the company’s agility in customizing a product line in record time.
However, a source reveals that what led to this interpretation was a note made by WEG itself on July 10, mentioning the supply of motors for the SpaceX project with Atlas Copco. Despite the alteration of the note without the names of the companies involved due to confidentiality agreements, the news of a possible partnership between WEG and SpaceX gained traction, boosting the shares.
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