Higher-than-expected first-quarter earnings at BB Seguridade Participações SA is likely to drive a round of earnings estimate upgrades among analysts covering the stock, analysts at Grupo BTG Pactual led by Eduardo Rosman said in a Tuesday note. BB Seguridade, the Brasilia-based insurance holding company controlled by state-run Banco do Brasil SA , earned 648.7 million reais ($291 million) in net income in the first quarter, above the 633 million reais estimate in a Reuters poll of four analysts.
Even as management at BB Seguridade reiterated their guidance for the year, and there are downside risks for the BrasilPrev retirement unit, "we see upside risks to consensus in 2014," Rosman and his team wrote. He has a 12-month price target of 27 reais a share, compared with trading levels of 27.59 reais on late Tuesday afternoon.
"We remain upbeat on BB Seguridade and reiterate our 'buy' recommendation as we believe selling insurance will remain a top priority at Banco do Brasil branches," Rosman wrote in the note. Currently, BB Seguridade, alongside card payment processor Cielo SA are BTG Pactual's top picks among financial and banking shares in Brazil.
($1 = 2.23 Brazilian reais) (Editing by Meredith Mazzilli)