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On Thursday, UBS analysts revised their outlook on B3 SA - Brasil Bolsa Balcao (B3SA3:BZ), downgrading the stock rating from Buy to Neutral while increasing the price target to R$16.00, up from the previous R$13.50. The adjustment follows a significant year-to-date surge in the company’s shares, which has tempered expectations for future gains.
The UBS analyst cited the stock’s more than 40% rise year-to-date as a primary reason for the downgrade, indicating a belief that the positive effects of a stabilizing interest rate environment and diversification are now adequately reflected in the current valuation. Despite the downgrade, UBS raised its earnings estimates for B3 SA by an average of 6% for the years 2025-2029, supporting the higher price target with expected better volumes.
The new price target of R$16.00 suggests that B3 SA would trade at 15 times its projected earnings for 2026, compared to the current 14 times. The analyst’s evaluation also points out that B3 SA is trading at a 42% discount relative to emerging market exchanges, aligning with historical averages. Additionally, the stock is valued at a 45% premium over Brazilian capital market peers like BTG and XP (NASDAQ:XP), which is higher than the historical average of 27%.
The UBS analyst’s commentary reflects a cautious stance, acknowledging the possibility of a more optimistic perspective should macroeconomic conditions and trading volumes exceed expectations or if B3 SA demonstrates substantial growth from other business segments. The analysis suggests that while the stock has performed strongly to date, the potential for additional re-rating may be limited at this stage.
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