UPDATE: Bank of America Upgrades Banco Bradesco SA to Buy, Raises PT on Short-Term Triggers, Underperformance

In a report published Wednesday, Bank of America analyst Jorg Friedemann upgraded the rating on Banco Bradesco SA

from Neutral to Buy, and raised the price target from $17.00 to $19.00. In the report, Friedemann noted, “We upgrade BBDC4/BBD from Neutral to Buy and raise its PO by a net 5% to R$38 (US$19 / ADR), equating to 16% upside plus a 3% dividend yield. Our revised PO factors in the recent 10% stock dividend and is driven by 50bp higher sustainable ROE to 18%. We also change our volatility risk rating from C to B. We attribute most of BBDC4's 8% underperformance versus ITUB4 in past four months to unconfirmed press speculation about a potential merger with Santander. We also see the potential IPO of BB Seguridade as a possible trigger for BBDC4, given its sizable insurance unit (31% of total profits).” Banco Bradesco SA closed on Tuesday at $16.30.