BTG Pactual receives upgraded price target from Citi

Citi has reiterated its buy recommendation for BTG Pactual (BPAC11) and raised its price target from R$ 70 to R$ 72. Analysts suggest the bank deserves a valuation premium compared to traditional large banks due to its structural business model and diversified revenue streams.

According to Citi, BTG Pactual has become less dependent on the Brazilian GDP and credit cycles, having increased its recurring fee income from client assets since 2020. The bank maintains a high return on equity (ROE) of approximately 26%.

Analysts noted that the projected price-to-earnings (P/E) multiple premium of BTG relative to Itaú Unibanco has compressed to approximately 20%, down from a historical average of 30% to 45%. This compression is viewed as creating an attractive relationship between the bank's growth, profitability, and valuation. Furthermore, Citi indicated that high interest rates may not be detrimental, as market volatility and higher spreads in corporate loans can benefit various areas of the bank's operations.