Brazil-based fintech StoneCo (STNE 2.00%), which shot to prominence after Warren Buffett investment vehicle Berkshire Hathaway disclosed a stake in the company, had an excellent Tuesday. The company's shares rose a hot 10.8%, shooting well ahead of the S&P 500 index's slightly more than 3% increase.
StoneCo's Tuesday to remember was due in no small part to a substantial price target bump. Wells Fargo analyst Jeff Cantwell was the man behind the raise; he now feels StoneCo stock is worth $11 per share, more than 20% higher than his previous $9 estimation.
Cantwell is not Buffett, however. In contrast to the obviously still-bullish CEO of Berkshire Hathaway -- which according to its last regulatory filing holds nearly 10.7 million StoneCo shares for a more than 3% stake in the company -- the analyst is cautious on the stock. Although Cantwell has lifted his price target, he maintained his equal weight (neutral) recommendation on the shares.
And he's relatively optimistic when compared to other prognosticators. In early September, for example, Goldman Sachs' Tito Labarta downgraded his StoneCo recommendation to sell from the preceding neutral. In a research update, Labarta cited rising interest rates and their effect on profit margins as a key reason for his move. He also expressed concern about competitors' gains in market share.
Buffett, Cantwell, and Labarta are all knowledgeable stock market professionals, and Berkshire Hathaway has been a wildly successful business.
Still, it's a good rule of thumb never to base an investment decision on the move of one person or company, no matter how renowned. As a sharp and ambitious fintech operating in a huge Latin American market, StoneCo has vast potential, even though it has struggled with profitability and the current macroeconomic environment probably isn't doing it many favors.