Tuesday, June 19, 2018

Itau Unibanco In A Wobbly Recovery Cycle

With another plunge in the exchange rate, there is once again a gulf between the performance of the actual business at Itau Unibanco (ITUB) (ITUB4.SA) and the performance of the local shares and ADRs. While the local shares haven't had a great six-month run (down about 6% versus a 3% drop in the Bovespa), the ADRs have suffered far more with a roughly 17% drop.

Between an upcoming election and a recovery that has already seen some fits and starts, Brazil isn't exactly a safe market. Moreover, while Itau is arguably the best-run of the Brazilian banks and generated better than expected returns during the downturn, management has a habit of over-promising and under-delivering and needs to reinvest in the next round of growth drivers. I do believe that Itau's shares are undervalued, but there's a lot of risk and volatility that comes with this name that may overshadow the opportunity for some investors.

Follow this link for the full article:
Itau Unibanco In A Wobbly Recovery Cycle

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