- It's too early to buy the dip, says Morgan Stanley, not enticed by recent underperformance and valuations at multi-decade lows.
- "The worst of the asset quality cycle is yet to come, earnings per share expectations and company guidance are too high, and macro fundamentals continue to deteriorate."
- Itau Unibanco (ITUB -0.2%) is a widely-held name, and its high exposure to unsecured consumer credit leaves it particularly sensitive to the employment down cycle, says the team, and its 1.4x price/book value is rich relative to peers. When the NPLs finally hit the bottom line, Morgan expects the stock to trade at or below book.
- Others of interest: Bradesco (BBD -0.2%), and Santander Brasil (BSBR +0.2%)