StoneCo Raises $500M via Bond Issuance

Financial technology solutions provider StoneCo Ltd. (STNE) has raised $500 million by issuing dollar bonds for the first time. The 7-year notes have a final yield of 3.95%.

The company plans to use the funds for general corporate purposes, which include financing its investment in Banco Inter, growth purposes, and refinancing some of its corporate debt.  (See StoneCo stock analysis on TipRanks)

Last month, StoneCo announced a $471 million investment for a minority stake in Brazil’s Banco Inter.

Significantly, the order book for the issue witnessed an oversubscription by many times, which StoneCo emphasized as evidence of its capacity to harness different sources of funding.

On June 9, Citigroup analyst Gabriel Gusan reiterated a Hold rating on the stock and lowered the price target to $66 (4.2% upside potential) from $69. Gusan highlighted heightened competition as a concern for the stock and attributed the Hold rating to revised lower guidance by the company.

The other analyst covering the stock, Banco Santander’s Henrique Navarro upgraded StoneCo to Hold from Sell alongside a $79 price target (24.8% upside potential).

The two ratings add up to a Hold consensus. The STNE average analyst price target of $72.50 implies 14.5% upside potential.

Shares have gained 71.2% over the past year.

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