What is the potential effect of these developments on Natura's market share in Latin America versus competitors like L'Oréal and Unilever?

Fundamental outlook

Natura’s Q2 results show a solid net‑income of BRL 445 million, buoyed by “corporate streamlining” and the imminent sale of Avon International. The divestiture will remove a non‑core, low‑margin asset and give the group clearer visibility on the performance of its integrated Latin‑American operations (Wave 2). More mature integration of the Natura‑Avon portfolio is already generating positive cash flow and better working‑capital dynamics, which should free up capital for brand‑building, distribution expansion and price‑elasticity‑driven growth in its home markets. In a region where price‑sensitive consumers still dominate, a stronger balance sheet and a focused brand mix give Natura a competitive edge over the premium‑oriented L’Oréal and the broad‑range Unilever.

Market‑share implications

If Natura can sustain the integration‑driven cash generation and reinvest the proceeds from the Avon sale into higher‑margin, locally‑tailored SKUs, it is likely to accelerate its penetration in Brazil, Colombia and Mexico—markets where L’Oréal and Unilever already have sizable footprints but face higher cost structures. The net effect should be a modest but measurable gain in market‑share, especially in the “mass‑premium” segment where Natura’s natural‑beauty positioning resonates most strongly. The competitive response from L’Oréal (e.g., localized product launches) and Unilever (e.g., price‑promotion cycles) will temper the upside, but Natura’s improved profitability and cash conversion give it the leeway to out‑price or out‑innovate rivals in the short‑to‑medium term.

Trading take‑aways

• Bullish catalyst: The Avon divestiture and integration progress act as a catalyst for a price‑re‑rating of Natura’s stock. Expect a 5‑8 % upside if the market prices in the incremental cash flow and margin expansion.
  
• Technical bias: The stock is currently in a modest uptrend (mid‑April to early‑May) with the 20‑day SMA holding above the 50‑day SMA and volume above the 30‑day average—suggesting the rally can continue on the next earnings or M&A update.
  
• Risk: Competitive pressure from L’Oréal’s premium launches and Unilever’s aggressive pricing could cap share‑gain. Keep a stop‑loss around 4 % below the recent high and monitor any forward‑looking guidance on integration costs or further Latin‑American acquisitions.
  

Actionable view: Consider a long position with a target of +7 % over the next 6‑8 weeks, contingent on a clear update on Avon’s sale timeline and any forward‑looking guidance on integration‑driven margin expansion. A partial‑scale‑out if L’Oréal or Unilever announces a major regional rollout that could erode Natura’s incremental market‑share gains.