0A4H.LSE▼
StoneCo downgraded to Neutral at BofA Securities on challenging Brazil outlook
BofA Securities downgraded StoneCo to Neutral from Buy and cut its price target to $13.00 from $23.00, citing a challenging operating environment in Brazil for 2026 and 2027. Analyst Mario Pierry lowered 2026 and 2027 earnings estimates by 9% and 13%, respectively, to reflect elevated funding costs and higher provision charges for credit losses. The firm noted that higher-for-longer interest rates will increase financial expenses because funding costs in the prepayment business are directly linked to the Selic rate. Headwinds are expected across both businesses: total payment volume growth should remain constrained by weak economic activity and elevated client churn, while higher rates should slow loan growth and lead to a higher cost of risk from asset quality deterioration. Shares were 0.27% lower at $11.27 during afternoon trading on Wednesday.