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Investing.com -- JPMorgan lowered its rating on Tim to Neutral following what it called a “very strong performance,” saying the stock has already priced in much of the improvement seen across Brazil’s mobile market.
The bank still views the competitive backdrop as healthy but prefers to wait for a more attractive entry point given the recent rally.
Tim’s U.S.-listed shares slipped 1.4% in premarket trading Thursday.
Tim stock has delivered total returns of 68% over the past year and 130% over three years, far ahead of peers Vivo (Telefonica Brasil) (BVMF:VIVT3) and Ibovespa index.
According to JPMorgan analysts, the stock is now trading near its updated R$26 price target, limiting prospective gains even when factoring in expected dividends. “Even with expected dividends, [shaes] do not offer more than 15% potential upside, by our estimates,” analyst Marcelo Santos noted.
He continues to favor the broader Brazilian mobile segment, highlighting a rational pricing environment and limited pressure from new entrants such as ISPs and MVNOs. Santos also points to early signs of upcoming price adjustments, including those planned by Tim.
Operationally, JPMorgan made only modest revisions to its estimates. It now expects Tim to grow mobile service revenue by about 5% in 2026 and 2027, in line with company guidance.
Margin expectations were lifted slightly, with adjusted EBITDA margins now seen at 51.4% in 2026 and 52.5% in 2027.
Net income projections were revised up by 0.9% for 2026 and 3.1% for 2027.
For the fourth quarter of 2025, the bank forecasts service revenue growth of 4.8% and an adjusted EBITDA margin of 51.4%.
JPMorgan also raised its December 2026 price target to R$26 from R$24.5 after assuming Tim will not need to pay the suspended FISTEL balance it has withheld since 2020, currently amounting to R$4.1 billion.
The bank still assumes full FISTEL payments going forward, and any change in regulatory terms could provide upside to estimates. Its valuation incorporates fiscal benefits, goodwill amortization and other assets, as well as the value of Tim’s stake in I-Systems.
While turning more cautious on the stock, JPMorgan continues to prefer Tim over Vivo on a relative basis, “as Tim offers lower valuations and is focused on mobile, which we see as more attractive than fixed in Brazil,” Santos wrote.
Meanwhile, Tigo (NASDAQ:TIGO) remains the bank’s preferred pick among Latin American telecom operators.