By Brazil Stock Guide – XP Investimentos reaffirmed its year-end 2025 target for Brazil’s Ibovespa at 150,000 points, even as earnings forecasts for several sectors have been revised downward. The forecast, reported by InfoMoney, reflects the firm’s view that the benchmark index remains attractive, trading at 9.1 times forward earnings.
Global markets gained ground in August, with the MSCI ACWI up 2.7%. Brazil’s equities outperformed, advancing 6.3% in reais and 9.4% in US dollars, supported by solid microeconomic fundamentals, prospects of interest rate cuts and the onset of electoral trading momentum, XP said.
Sector winners and losers
Construction stocks were among the standouts, climbing 17.6%. MRV (BVMF: MRVE3) jumped 27.9% after reporting strong results in Brazil, aided by falling short-term interest rates. The healthcare sector gained 15.2%, driven by Hapvida (BVMF: HAPV3), up 23.7%, and Rede D’Or (BVMF: RDOR3), which advanced 20.1%. Hapvida’s results met expectations, while Rede D’Or delivered higher-than-expected volumes that boosted margins.
On the downside, the agribusiness sector slipped 6.2%, led by Raízen (BVMF: RAIZ4), which tumbled 23.2% following weak second-quarter earnings and higher leverage.
Earnings revisions and resilience
While earnings per share estimates for 2025 and 2026 have been cut by 12.5% and 11.5% respectively, XP noted that 57% of companies under its coverage beat profit expectations in August. Most of the downgrades were concentrated in commodity-related sectors, pressured by a stronger real and lower international prices.
Financials and other domestically sensitive industries also faced modest profit declines due to economic headwinds and company-specific factors — Banco do Brasil (BVMF: BBAS3) was singled out as an example. Still, these sectors have shown relative resilience over the past 12 months.
Outlook
XP highlighted that domestically driven sectors such as healthcare and utilities continue to post robust earnings growth, in contrast to the negative trends in mining and steel, both heavily tied to commodities. However, the firm warned that new rounds of downward revisions could emerge in the second half if signs of economic slowdown intensify.
Despite stronger investor appetite for riskier assets, XP reiterated its preference for high-quality companies with strong balance sheets.