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Investing.com - UBS downgraded Banco BTG Pactual SA (SA:BVMF:BPAC11) from Buy to Neutral on Thursday, while simultaneously raising its price target to BRL47.00 from BRL43.00.
The Brazilian investment bank’s stock has significantly outperformed the local index year-to-date, gaining approximately 50% compared to the Ibovespa’s 12% increase, according to UBS. Despite this strong performance, the firm believes the current valuation limits further re-rating potential.
UBS projects Banco BTG Pactual (BVMF:BPAC3)’s second-quarter 2025 results at R$3.7 billion, approximately 5% above consensus estimates. The firm’s earnings forecast shows a 2-year compound annual growth rate of 15%, with return on average equity trending high at around 23%.
The downgrade comes despite UBS’s year-to-date earnings revisions translating into modest increases of 6-8% for 2025-26. The firm’s sum-of-the-parts analysis indicates BTG Pactual’s fair price-to-book value at approximately 2x and fair price-to-earnings at roughly 12x-13x, which aligns with current multiples.
UBS noted that a "significant enhancement in the macroeconomic environment appears essential to warrant an elevated valuation" for Banco BTG Pactual, despite its notable bottom-line growth prospects.
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