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The 2014 All-Brazil Research Team: Financials/Banks, No. 3: Saul Martinez

Saul Martinez J.P. Morgan First-place appearances: 1

Total appearances: 4

Team debut: 2009

After a two-year absence, New York–based J.P. Morgan analyst Saul Martinez returns in third place, notching his best showing since 2010, when he topped the roster. “Saul is a long-timer in the industry, knows the banks extremely well and has a great understanding of related businesses like insurance and asset management,” declares one fan. For his part, Martinez notes that banking shares’ recent rally is “based on both good earnings momentum and greater optimism that the outcome of October’s presidential elections will lead to more market-friendly policies.” Government-controlled Banco do Brasil — Latin America’s largest bank, by assets — has performed especially well, he notes. It soared 48.2 percent from its March low point through July, while the sector jumped 30.2 percent and Brazil’s broad market gained 19.8 percent. Even so, in general, Martinez recommends that investors prefer “higher-quality names” such as Banco Bradesco and Itaú Unibanco Holding, over “deeper-value options” represented by Banco do Brasil and Banco Santander Brasil, for example. Itaú is a favorite among the six companies he covers. Shares of the São Paulo–based financial services giant beat Brazil’s broad market by 8.4 percentage points over the first seven months of 2014, rising 13.6 percent, to 27.72 reais. “Earnings momentum is good, and there is some upside to consensus estimates,” he explains. “We also think that management has been adept at adapting to the changed reality of banking in Brazil, a more difficult one, and at finding value opportunities in nonbanking and international businesses.”


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