Basic Sanitation Company of the State of Sao Paulo – SABESP Downgraded to “Neutral” at Zacks (SBS)

Basic Sanitation Company of the State of Sao Paulo ? SABESP (NYSE: SBS) Zacks? analyst wrote, ?SABESP?s 3Q12 earnings per ADR came in at US$1.59 compared with US$0.37 in the year-ago quarter, but below the Zacks Consensus Estimate of US$2.13. Revenues climbed 4.5% on the back of higher water supply, sewage collection and treatment, and construction revenue. Billed water and sewage volume increased 3.2% in the quarter. We believe SABESP will gain momentum and continue to work for its long-term target of providing 1.3 million new water connections and 1.7 million sewage connections by 2019. However, near-term concerns emanating from escalating cost of sales and services (roughly 59% of total revenue), political interference, mounting debt levels and risk of foreign exchange losses cannot be ignored. Hence, anticipating the company?s performance in line with the broader market we have downgraded our recommendation on the stock from Outperform to a Neutral recommendation.? Basic Sanitation Company of the State of Sao Paulo ? SABESP traded down 2.85% on Friday, hitting $81.37. Basic Sanitation Company of the State of Sao Paulo ? SABESP has a 52-week low of $52.36 and a 52-week high of $92.00. The company has a market cap of $9.270 billion and a price-to-earnings ratio of 11.85.

Companhia de Saneamento Basico do Estado de Sao Paulo-SABESP is a mixed capital company, majority-owned by the State of Sao Paulo. To view Zacks? full report, visit www.zacks.com

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