Ibovespa at 185K Points: Itaú BBA Sees Brazilian Stocks Still Undervalued, Projects 15% Rally by December 2026
- Why Is Itaú BBA Bullish on the Ibovespa?
- The 15% Rally Thesis: What’s Fueling It?
- Where’s the Smart Money Going?
- Risks You Can’t Ignore
- FAQ: Your Burning Questions Answered
The Brazilian stock market is poised for another bullish run, with Itaú BBA forecasting a 15% surge in the Ibovespa to 185,000 points by December 2026. Despite a stellar 34% gain in 2025 (50% in USD terms), analysts argue valuations remain attractive, trading at a P/E of 9.3x vs. the historical 10.4x average. Key drivers include anticipated rate cuts by Brazil’s Central Bank (225 bps expected in 2026) and potential Fed easing. The bank’s updated portfolio favors infrastructure and cyclical stocks, with top picks like Axia Energia and Cyrela offering 28% total return potential. Risks? Fiscal concerns and current account deficits.
Why Is Itaú BBA Bullish on the Ibovespa?
Let’s cut to the chase: Brazil’s benchmark index is still cheap. According to Daniel Gewehr’s team at Itaú BBA, the Ibovespa trades at a 12% discount to its historical P/E multiple (9.3x vs. 10.4x). Even compared to emerging market peers, Brazilian stocks look like a bargain bin with hidden gems. "We’re seeing double-digit earnings growth in domestic and financial sectors—enough to offset commodity headwinds," notes the report. TradingView data shows the index has consistently outperformed after similar valuation gaps.
The 15% Rally Thesis: What’s Fueling It?
Two words:. Itaú BBA predicts Brazil’s Selic rate will drop from 15% to 12.75% by December 2026, historically a turbocharger for equities. "Stocks average 17.5% gains in the six months after the first cut," the analysts highlight. Add potential Fed rate reductions (2 cuts expected in 2026), and you’ve got a "sweet spot" for Brazilian assets. Remember 2019? When the Fed last eased, Brazil delivered 15.2% USD returns in six months—excluding crisis periods.
Where’s the Smart Money Going?
Itaú BBA’s 2026 portfolio shuffle tells the story:
| Company | Ticker | Sector |
|---|---|---|
| Axia Energia | AXIA3 | Utilities |
| Cyrela | CYRE3 | Real Estate |
| Nubank | ROXO34 | Fintech |
| Prio | PRIO3 | Energy |
Risks You Can’t Ignore
No bull market is bulletproof. Itaú BBA flags Brazil’s fiscal trajectory and current account deficit as "make-or-break" factors. "If Congress loosens purse strings further, all bets are off," warns a BTCC market strategist (who asked not to be named). CoinMarketCap data shows emerging market currencies remain vulnerable to Fed pivots—another wild card.
FAQ: Your Burning Questions Answered
How reliable are Itaú BBA’s forecasts?
Their 2025 call was spot-on, but past performance ≠ future results. Cross-check with Banco Bradesco’s 180K year-end target.
Should I dump commodity stocks entirely?
Not necessarily. Suzano (SUZB4) stayed in Itaú’s portfolio—pulp prices are cyclical.
What’s the best ETF for Ibovespa exposure?
EWZ (iShares MSCI Brazil) tracks the index with 0.59% fees. Or try stock-picking among their top 10.
