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Investing.com - UBS downgraded BTG Pactual (BPAC11:BZ) from Buy to Neutral on Thursday, while simultaneously raising its price target to R$47.00 from R$43.00.
The Swiss investment bank cited limited re-rating potential despite BTG Pactual’s strong projected earnings growth of 15% CAGR over two years. UBS noted the stock has significantly outperformed Brazil’s benchmark index year-to-date, rising approximately 50% compared to the Ibovespa’s 12% gain.
UBS projects BTG Pactual’s second-quarter 2025 results at R$3.7 billion, approximately 5% above consensus estimates, with return on average equity remaining high at around 23%. The bank’s earnings revisions translate to modest shifts of 6-8% for 2025-26.
The downgrade comes after UBS conducted a sum-of-the-parts analysis indicating BTG Pactual’s fair price-to-book value at approximately 2x and fair price-to-earnings ratio at roughly 12x-13x, which aligns with current trading multiples.
UBS concluded that a significant improvement in Brazil’s macroeconomic environment would be necessary to justify a higher valuation for BTG Pactual shares, despite the bank’s notable bottom-line growth prospects.
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