The Long-Term Prognosis for Itau Unibanco Holding S.A. (ITUB)

Analysts at Citigroup cut their rating on shares of Itau Unibanco Holding S.A. (NYSE:ITUB) from Buy to Neutral in their opinion released on October 25. JP Morgan analysts have downgraded their rating of ITUB stock from Overweight to Neutral in a separate flash note to investors on July 12. Analysts at Goldman issued an upgrade from Sell to Neutral for the stock, in a research note that dated back to July 20.

By watching the trading activity of corporate insiders, it will become easier to get a sense of Itau Unibanco Holding S.A. (NYSE:ITUB)’s prospects.

Itau Unibanco Holding S.A. (ITUB) is expected to jump by -2.3 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $11.36-month high price target. This represents a whopping 24.29 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $9.06, which represents a return potential of -0.88 percent when compared to the closing price of the stock of $9.14 on Tuesday, December 04. The lowest price target for the stock is $6.72 — slightly more than -26.48 percent from ITUB’s current share price.

The shares are currently floating around the first support level of $8.99. Below this, the next support is placed in the zone of $8.85. Till the time, the ITUB stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 54.17 on daily chart, which may remain a cause for concern. If the price breaks below $8.85 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $9.3 mark may result into a pull-back move towards $9.47 level.

ITUB shares dropped -0.08 points or -0.87 percent on Tuesday to $9.14 with a light trade volume of 12.512 million shares. After opening the session at $9.25, the shares went as high as $9.32 and as low as $9.01, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $83.8 billion and now has 9.17 billion shares outstanding. Itau Unibanco Holding S.A. (ITUB) stock has gained 0.37 percent of market value in 21 trading days.

ITUB stock has a trailing 3-year beta of 1.21, offering the possibility of a higher rate of return, but also posing more risk. The portion of a company’s profit allocated to each outstanding share of common stock was $0.63 a share in the trailing twelve months. The stock’s value has surged 11.68 percent year to date (YTD) against a rise of 13.04 percent in 12 month’s time. The company’s shares still trade -15.39 percent away from its 1-year high of $10.80 and 40.48 percent up from 52-week low of $6.51. The average consensus rating on the company is 2.5, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

Shares of Itau Unibanco Holding S.A. (ITUB) are trading at a P/E ratio of 12.49 times earnings reported for the past 12 months. The industry ITUB operates in has an average P/E of 19.02. Its P/E ratio went as low as 6.32X and as high as 9.72 over the 5-year span. Further, it is sporting a 2.45 on the Price-to-Sales ratio. Compare this with the industry average P/S of 5.73. 0 percent is the gross profit margin for Itau Unibanco Holding S.A. and operating margin sits at 41.8 percent. Along with this, the net profit margin is 18 percent.

ITUB will be showing off its Q4 earnings on February 16. Analysts are forecasting revenue to suffer decline of -17.2 percent to $7.54B in the next fiscal quarter, while earnings are seen soaring by nearly -10 percent to $0.18 per share. History has shown that shares in Itau Unibanco Holding S.A. have gone up on 6 different earnings reaction days and are predicted to add 0.02 percent when the company reports upcoming earnings. In last reported earnings results, it earned $0.17 per share, in line with the $0.17, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $7.07B, worse than the $7.15B analysts expected. Earnings are estimated to increase by 3.1 percent this year, 8.45 percent next year and continue to increase by 9.3 percent annually for the next 5 years.