Santander, PagSeguro, XP downgraded at BofA; BBSE upgraded

Bank of America Securities downgraded PagSeguro Digital (NYSE:PAGS), XP Inc. (NASDAQ:XP) and Banco Santander (NYSE:SAN) to Neutral from Buy on Tuesday, as analyst Mario Pierry sees a more challenging operating environment next year for Brazilian financial firms.

The downbeat outlook comes as BofA economists see slower GDP growth in South America's largest economy in 2025, as well as higher-for-longer interest rates.

With an extended monetary tightening cycle in Brazil, Pierry became more selective with his 2025 picks. However, he also upgraded insurer BB Seguridade (OTCPK:BBSEY) to Buy from Neutral.

In Tuesday morning trading, (NYSE:PAGS) and (NASDAQ:XP) slid 2.1% and 0.4%, respectively, while (NYSE:SAN) gained 0.8%.

In the meantime, Seeking Alpha's Quant system gives Nu Holdings (NU) the highest mark among Brazilian financial firms, followed by Banco Santander (Brasil) (BSBR) and Banco do Brasil (OTCPK:BDORY).