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Investing.com - Goldman Sachs downgraded PagSeguro (NYSE:PAGS) from Buy to Neutral and lowered its price target to $9.00 from $12.00, citing continued headwinds to total payment volume (TPV). According to InvestingPro data, PAGS currently trades at an attractive P/E ratio of 6.86 and shows strong YTD returns of 47.58%, while analysis suggests the stock is currently undervalued.
The investment bank noted that PagBank’s TPV growth has sharply declined while its market share has steadily fallen by over 100 basis points since the third quarter of 2024. Goldman Sachs partially attributes this weaker growth to a greater share of micromerchants in PagSeguro’s customer base.
Goldman Sachs expects further challenges to TPV growth as the macroeconomic environment remains difficult, and believes the market has not fully priced in this slower growth trajectory. The firm’s TPV estimates are 3% below Visible Alpha consensus for both 2025 and 2026, with net income projections 3% below consensus in 2025 and 4% below in 2026.
Despite these concerns, Goldman Sachs maintained a Neutral rather than Sell rating, noting that PagBank has announced R$1.6 billion in dividends for 2026, representing a 10.8% yield.
The firm also identified potential upside risk from PagSeguro’s credit portfolio, though it does not expect this to materialize until 2027.
In other recent news, PagSeguro Digital Ltd reported notable financial results for Q2 2025, with revenue increasing by 11% year-over-year to BRL 5.1 billion. The company’s diluted GAAP earnings per share also saw a rise of 14.2%, reaching BRL 1.79. These results come despite a challenging economic environment in Brazil, highlighting PagSeguro’s ability to expand its client base and improve financial performance. Additionally, Morgan Stanley updated its outlook on PagSeguro, raising the stock price target to $7 from $5 while maintaining an Underweight rating. The revised price target reflects updated earnings per share forecasts and a slight reduction in the discount rate used in Morgan Stanley’s valuation model. These developments provide investors with key insights into the company’s recent performance and analyst expectations.
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