JPMorgan cuts Banco do Brasil stock rating to neutral

On Monday, JPMorgan adjusted its stance on Banco do Brasil SA (BBAS3:BZ) (OTC: OTC:BDORY), downgrading the stock from Overweight to Neutral. The decision comes despite the bank’s shares having experienced a significant rally this year, with approximately a 30% increase in USD terms. According to InvestingPro data, the stock has achieved a 33.26% YTD return and is currently trading near its 52-week high of $5.82. JPMorgan’s analysts cited the rally as a key reason for the downgrade, pointing out the limited potential for further upside.

The price target set by JPMorgan for Banco do Brasil remains at R$31.00. The analysts explained that while the valuation at 4.2x 2025 estimated earnings appears discounted, they do not foresee additional earnings per share revisions or cost of equity reductions at this juncture. InvestingPro analysis reveals the bank’s current P/E ratio stands at 4.61x, with a notable dividend yield of 7.32% and an impressive 29-year track record of maintaining dividend payments. The absence of short-term catalysts and the limited total return projection of 18% were instrumental in the decision to lower the rating.

JPMorgan’s assessment indicates that Banco do Brasil’s current market performance does not warrant a revision of their short-term financial projections or the December 2025 price target of R$31 per share. The firm’s analysis suggests that the potential upside, combined with an estimated 10% yield for 2025, culminates in an 18% total return, which does not meet the threshold for a more bullish rating.

The downgrade reflects JPMorgan’s position that Banco do Brasil’s stock has reached a plateau following its year-to-date rally, and that investors should temper their expectations for future gains. The bank’s stock will continue to be monitored by investors for any signs of change that might influence its market valuation.

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