Operating earnings may decline at Brazilian drugmaker
Hypermarcas SA and apparel producer and retailer Cia
Hering SA if the government moves forward with a
plan to unify and redistribute state value-added taxes on
interstate transactions, Bank of America Merrill Lynch analysts
wrote in a report on Friday.
Hypermarcas, the nation's No. 1 diversified drugmaker, might
lose incentives equal to 20 percent of earnings and would
require a 3 percent price increase over the course of eight
years to fully offset the impact.
In the case of Hering, analysts led by Robert Ford estimate
that total state tax incentives could represent 5 percent of
gross sales and 29 percent of net income next year.
The bank has a "buy" recommendation on shares of Hypermarcas
and a "neutral" rating on Hering.