Last Update06 Aug 25Fair value Increased 6.27%
Banco Bradesco's price target has been revised upwards, primarily reflecting an improvement in net profit margin from 15.90% to 17.06%, more than offsetting a modest increase in discount rate, resulting in a higher fair value estimate of R$18.48.
What's in the News
- Board meeting held to consider and approve proposal for payment of interim interest on shareholders equity per common and preferred share.
Valuation Changes
Summary of Valuation Changes for Banco Bradesco
- The Consensus Analyst Price Target has risen from R$17.54 to R$18.48.
- The Net Profit Margin for Banco Bradesco has risen from 15.90% to 17.06%.
- The Discount Rate for Banco Bradesco has risen slightly from 19.46% to 20.15%.
Key Takeaways
- Technology investments, digital expansion, and advanced analytics are driving efficiency, revenue diversification, and improved risk management for more stable and higher earnings.
- Growth opportunities in new segments and easing economic conditions are expected to support loan expansion, fee income, and ongoing margin improvement.
- Digital disruption, demographic shifts, cost pressures, and heightened regulatory and cyber risks threaten Bradesco's growth, profitability, and competitive position if not proactively addressed.
Catalysts
About Banco Bradesco- Provides various banking products and services to individuals, corporates, and businesses in Brazil and internationally.
- The expansion of Bradesco's digital banking services, use of Gen AI, and rapid technology investments are driving material gains in productivity and operational efficiency, positioning the bank to reduce its cost-to-income ratio and improve net margins over the next several years.
- Growth is robust across insurance, asset management, and fee-based businesses-with insurance revenues up over 20% year over year-enabling greater revenue diversification and higher earnings stability, which should underpin higher long-term returns and reduce earnings volatility.
- The large addressable market from rising financial inclusion and expansion into SMEs, microbusinesses, and lower-income individual segments-supported by new digital platforms and expansive correspondent banking-offers significant ongoing opportunities to grow loan books and fee income, especially as the Brazilian middle class expands.
- Bradesco's strong risk controls, increased focus on secured lending, and use of advanced analytics for credit management are helping to keep delinquencies and loan loss provisions in check, providing a foundation for healthier asset quality and more consistent earnings growth.
- Easing macroeconomic headwinds, particularly the anticipated decline in Brazil's Selic rate, are likely to boost credit demand, improve net interest margins, and further support revenue and earnings expansion as the country's economic environment gradually strengthens.
Banco Bradesco Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Banco Bradesco's revenue will grow by 27.2% annually over the next 3 years.
- Analysts assume that profit margins will shrink from 23.6% today to 17.1% in 3 years time.
- Analysts expect earnings to reach R$30.8 billion (and earnings per share of R$2.96) by about August 2028, up from R$20.7 billion today. The analysts are largely in agreement about this estimate.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 11.1x on those 2028 earnings, up from 8.0x today. This future PE is greater than the current PE for the US Banks industry at 5.7x.
- Analysts expect the number of shares outstanding to decline by 0.14% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 20.14%, as per the Simply Wall St company report.
Banco Bradesco Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- The rapid adoption of digital and fintech alternatives in Brazil could erode Bradesco's market share, particularly among the mass market and SMEs, potentially reducing revenue growth from traditional banking and fee-based products over time.
- Demographic trends such as slow population growth and an aging population in Brazil may dampen long-term demand for credit and financial services, posing risks to sustained loan book and net interest income expansion.
- Persistent high operating expenses-including ongoing investments in technology, branch optimization, and labor-may offset productivity gains, resulting in continued pressure on efficiency ratios and net margins if not met by sufficient top-line growth.
- Prolonged periods of elevated or volatile interest rates, or a macroeconomic environment with slow GDP growth and subdued credit demand, could compress net interest margins and reduce earnings, especially as Bradesco emphasizes risk-averse, lower-spread loan segments.
- The increasing threat of open banking, regulatory changes, and intensified cyber risk requires continual capital and compliance investments; failure to adapt quickly could expose Bradesco to reputational damage, increased operational costs, and further pressure on margins and profitability.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of R$18.638 for Banco Bradesco based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of R$24.0, and the most bearish reporting a price target of just R$15.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be R$180.5 billion, earnings will come to R$30.8 billion, and it would be trading on a PE ratio of 11.1x, assuming you use a discount rate of 20.1%.
- Given the current share price of R$15.67, the analyst price target of R$18.64 is 15.9% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
How well do narratives help inform your perspective?
Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.