O Bradesco (BBDC4) has seen better days on the stock exchange, with results affected by default, worsened by the case Americans (AMER3). It is difficult to find an analyst who supports optimism on paper.
This Tuesday, the Credit Suisse lowered the paper’s target price from BRL 16 to BRL 15, a potential increase of 15% compared to the last close. The recommendation is for sale.
According to analysts Marcelo Telles and Daniel Vaz, the return is low for a risky role.
“We see the segment with limited growth potential, given the subdued activity of capital markets and greater risk perception, reflected by corporate bonds and rising loan spreads”, they say.
In addition, remember the duo, the Bradesco it has the highest exposure to micro and small companies compared to other banks, which has been a red flag in recent results. This, they say, should continue to downgrade asset quality in a higher interest rate perspective.
Telles and Vaz calculate that the bank’s shares trade at 7.0x P/E (price on earnings) for 2023 (0.81x P/B) and 5.5x P/E for 2024 (0.75x P/B), ” the latter implying a small discount of 6% P/L for the Itaú Unibanco (ITUB4), which we consider unattractive”.
Downgraded projections
Credit also downgraded its projections to accommodate the guidance for 2023, in addition to the expectation of timid growth in customer profit margins in view of a possible change in the mix to secured loans in retail.
“It is worth noting that net interest income (NII) may be impacted if Bradesco stops earning interest income from Americanas, since the retailer entered into judicial recovery“, puts.
Altogether, the Bradesco provisioned almost BRL 5 billion per exposure to the retailer. The bank was one of the most affected by the company’s failure.
In this way, Credit sees a profit of BRL 18.8 billion for the bank in 2023, before BRL 23 billion, “implying a mediocre ROE (return on capital) of 12%”.
For 2024, Bradesco should also earn less, with projections cut from BRL 29 billion to BRL 23.9 billion, and ROE of 14%.
Strength from Campos Neto
According to Credit, to have a better scenario, the Bradesco need to hope for faster cuts in the Selicin addition to superior asset quality performance and improvement in the macroeconomic environment.
Next Wednesday, the central bank meets again to define the Basic Interest Rate (Selic). The expectation, however, is that the BC will keep the Selic at 13.75%.
According to the Boletim Focus, released last Monday, with regard to the basic interest rate, the Selic scheduled for 2023 was maintained at 12.75%. For 2024 the projection remains at 10%.
Source: Moneytimes
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