The shares gained 3.4 percent to 22.84 reais at 1:19 p.m. in Sao Paulo, the biggest advance on a closing basis since Aug. 22. The rally was the biggest on the MSCI Brazil/Financials index, which added 1.4 percent.
JPMorgan initiated coverage of Banco do Brasil with an overweight recommendation, saying today in a research note that concern over the government’s demand that the Brasilia-based lender increase financing to spur economic growth is exaggerated. JPMorgan set a 2014 target price of 28 reais.
“We see the risk to reward profile as asymmetrically positive at current very depressed valuation,” Saul Martinez, Domingos Falavina and Christopher Delgado, analysts at JPMorgan, wrote in the research note.
Banco do Brasil’s shares trade at 6.1 times Banco do Brasil’s estimated earnings for 2014, the lowest ratio among Latin American banks that JPMorgan covers, the firm said in the research note.
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