Brazilian homebuilder Gafisa (NYSE:GFA) on Sunday posted a net loss of R$1.093 billion (US$599.13 million) in 2011 as the company reviews changes to its structure and operations to return to profit.

Just beautiful… but what are the analysts saying?

Credit Suisse (Guilherme Rocha, Daniel Gasparete and Vanessa Quiroga):

“Looking ahead, we believe that short-term performance of the company remains uncertain. With the company’s record leverage ratio plus an uncertain scenario for the sector, we continue to recommend that investors be wary of the stock.” 

JPMorgan (Adrian Huerta and Marcelo Motta):

“We expect a negative performance for the stock not only because of the 2011 results, but we also believe that there are downside risks to the 2012 estimates with many uncertainties and other potential losses. Moreover, Gafisa is still carrying a lot of inventory units from Tenda and it is unclear what are the potential margins and cash flow that can be generated from these.”

Itau (David Lawant):

“Gafisa announced today that … it will postpone the release of its 4Q11 results … although we endorse the management team’s strategy and believe that it is probably the only way to return Gafisa to normal profitability in the mid- to long-term, we expect a negative reaction … due to the larger-than-expected adjustments made in the quarter.

Among the R$890 million in adjustments in the quarter, we believe that the main ones are: i) cost overruns totaling R$587 million (39% from Gafisa and BRL 61% from Tenda), representing 8% of the total budget of the related projects, which will have an impact of R$ 441 million on 4Q11 results; ii) a revision of receivables from Tenda, including the cancelation of 4,000 units, a provision for future cancellations equivalent to 8,000 units and an increase in bad debt provisions; iii) an impairment test in the landbank; and iv) provisions for potential fees for delays in the delivery of units.

… We would rather stay exposed to companies which we believe will deliver a combination of low leverage, solid returns, growth and positive free cash flow generation in 2012.”

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