StoneCo downgraded at BofA Securities on challenging operating environment

StoneCo (STNE [https://seekingalpha.com/symbol/STNE]) was cut to Neutral from Buy, with the price target lowered to $13.00 from $23.00, at BofA Securities over a challenging operating environment in Brazil in 2026/2027.

Shares were 0.27% lower at $11.27 during afternoon trading on Wednesday.

"We cut our '26/27 earnings estimates by 9%/13% to reflect elevated funding costs and higher provision charges for credit losses," said analyst Mario Pierry.

"Higher-for-longer interest rates should lead to higher financial expenses, as funding costs in the prepayment business are directly linked to the Selic rate," said the research note.

"We expect headwinds across both businesses: i) on payments, TPV growth should remain constrained by weak economic activity and elevated client churn, ii) on credit, higher rates should slow loan growth and lead to higher cost of risk, reflecting asset quality deterioration," said the investment bank.

BofA's rating differs from the Strong Buy rating by Seeking Alpha authors [https://seekingalpha.com/symbol/STNE/ratings/author-ratings] and the Buy rating by Wall Street analysts [https://seekingalpha.com/symbol/STNE/ratings/sell-side-ratings]. Meanwhile, the Quant Rating [https://seekingalpha.com/symbol/STNE/ratings/quant-ratings] system sees the stock as Sell.

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