Banco BTG Pactual SA got $4 billion poorer in market value in just 48 hours last August, devaluing the bank's stocks by as much as 40 percent following a series of a legal mess.
This year's strongest recovery in local markets has rewarded shareholders who kept their faith with the stock. The lender has risen year-to-date by 197 percent, the highest increase in Brazil's main stock index, but that's a different story.
Even after the jump left BTG shares hovering close to a record high, analysts at UBS Group AG and Morgan Stanley say it could gain as much as 20 percent more as investors focus on how the bank can benefit from its home country's all-time low rates.
Growth, expansion seen
"The bank could enjoy a multi-year period of solid profit growth and expansion of revenues as reforms and policies continue to support sustainable economic growth and low-interest rates," Jorge Kuri-led Morgan Stanley analysts wrote in a report on November 5, adding that BTG is one of their favorite names in Latin America.
The rally is not the first impressive comeback from BTG. When the bank's founder and largest shareholder, Andre Esteves, was temporarily put behind bars as part of the long-running Carwash investigation back in 2015, BTG was hounded with a liquidity crisis that almost tore it down.
Esteves was later cleared of all charges and the prosecutor's office said there was "not enough evidence" against him. He has returned as a senior corporate partner since then.
Police searched the offices of the firm and Esteves' home again in August, prompting another sell-off in which chief executive Roberto Sallouti had to reassure investors that their money is safe.
20 percent rally
In comparison with 2015, after the report, BTG did not see any major losses. The units of the company - a mix of voting and non-voting assets - have since risen to about 20 percent.
In October, in a probe into suspected leakage of Brazil's benchmark price decisions, the bank had another run-in with the law, as a fund related to it was put in danger. BTG disclosed it had no power to decide or engage in the scheme, and simply acted in trustee capacity. As a result, stocks dropped but recovered in no time.
BTG Pactual is a Brazilian financial firm that focuses in wealth management, investment banking and asset management.
UBS, which started covering the bank with last month's buy rating, said in a disclosure that "negative news flow" is a major risk that could spark instability. Today, UBS has given to BTG's units a price target of 82 reais, 18 percent higher than its current rate.
