Zacks Investment Research downgraded shares of Itau Unibanco Holding S.A. – ADS (ITUB) from OUTPERFORM to NEUTRAL on June 16, 2014, with a target price of $16.00.
We have downgraded our long-term recommendation on Itau Unibanco to Neutral based on the company's undisciplined expense management reflected in the first-quarter 2014 results. However, recurring earnings were up year over year. Elevated banking service fees, income from banking charges and a rise in the managerial financial margin were the positives. We believe the company's diversified product mix, increasing operating revenues and expanded credit portfolio are encouraging. Moreover, the recent merger with CorpBanca will help enhance Itau Unibanco's footprint in Chile. However, increasing competition, elevated expenses and stressed conditions in the Brazilian economy pose risks.
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