On Thursday, Citi adjusted its stance on Inter & Co Inc. (NASDAQ: INTR), shifting the rating from Buy to Neutral. Alongside the downgrade, the firm also set a new price target of $6.00, reduced from the previous $6.30. The decision follows a review of the company's recent financial activities, including its fourth-quarter results and a follow-on offering.
The revised estimates by the firm have led to an increase in Inter & Co's earnings projections for the years 2024 and 2025, with expected rises of 2% and 5%, respectively. These projections are influenced by the proceeds from their follow-on offering. Despite the improved earnings forecast, the price target has been lowered due to a reassessment of the stock's valuation.
Inter & Co has demonstrated a strong operational performance, with an acceleration in its loan book and an enhancement in profitability. The return on equity (ROE) for the company is anticipated to hit 13% in 2024. The stock has shown resilience, bouncing back from the initial dip caused by the follow-on offering.
The current market pricing of Inter & Co's stock is deemed appropriate by Citi, with a 1.3 times price-to-book value (P/BV) ratio forecasted for 2024, which aligns with the company's optimistic outlook for the year. However, the firm suggests that any potential for a re-rating of the stock is contingent on the continuation of profitability improvements into 2025.
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