TIM S.A. stock rating downgraded to Neutral by BofA despite price target hike

Investing.com - BofA Securities downgraded TIM S.A. (NYSE:TIMB) from Buy to Neutral on Wednesday, while simultaneously raising its price target from $20.00 to $23.00. The company, which boasts a perfect Piotroski Score of 9 according to InvestingPro data, currently trades at a P/E ratio of 15.75.

The downgrade comes despite positive sector dynamics, with BofA analyst Lucca Brendim noting limited space for short-term earnings revisions and balanced returns following strong stock performance. TIM shares have gained 80% year-to-date on a total return basis, significantly outperforming Brazil’s Bovespa index, which is up 16%. InvestingPro analysis reveals the company maintains strong financial health with an overall score of 3.44 out of 5, with 13 additional ProTips available to subscribers.

The research firm acknowledged that all companies in the sector have increased mobile prices above inflation rates, and new market entrants like Nucel and ISPs have had limited impact on established players. However, BofA believes these positive factors are already reflected in TIM’s current stock price, though InvestingPro’s Fair Value analysis suggests the stock remains slightly undervalued.

BofA highlighted that TIM’s expected dividend yield for 2026 stands at approximately 8.5%, with an additional 1% from share buybacks. This yield is comparable to other dividend-paying sectors such as Utilities and Financials.

The price target increase from $20.00 to $23.00 incorporates BofA’s updated macroeconomic estimates, higher margins in line with company guidance, and a valuation roll forward to year-end 2026.

In other recent news, TIM S.A. announced the completion of its reverse split and subsequent split operation, resulting in adjusted trading of its shares on the B3 and NYSE exchanges. The process involved a reverse split at a ratio of 100 shares to one, followed by a division back into 100 shares per consolidated share, maintaining the company’s overall capital stock. Shareholders had a 30-day period to adjust their holdings, with any fractional shares to be sold at auction on the B3 exchange. This transaction will not affect the company’s ADR program on the NYSE, as the depositary bank will adjust local shares to maintain the existing ADR ratio.

In addition, TIM S.A. has achieved the top ranking on Brazil’s Corporate Sustainability Index (ISE) of B3, reflecting its commitment to environmental, social, and governance (ESG) principles. The company has been part of the ISE for 17 consecutive years and has risen three places to secure the first spot this year. This achievement highlights TIM S.A.’s leadership in sustainable practices within the telecommunications sector in Brazil. The company’s continued focus on sustainability and corporate governance underscores its reputation as a responsible organization.

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