UBS cuts PagSeguro stock price target on TPV growth concerns

UBS has reduced its price target on PagSeguro Digital Ltd. (NYSE:PAGS) shares to $11.00 from $12.50, while keeping a Buy rating intact. The stock is currently trading at $8.90, which is near its 52-week low of $8.42. UBS's assessment is based on second-quarter 2026 results and recent trends, indicating relatively low total payment volume growth, particularly after the prohibition of bets, with credit gains traction.

The investment firm has slashed its GAAP net income estimates by approximately 10% over the 2026-2030 period. Despite acknowledging weak earnings momentum, UBS maintains its Buy rating, anticipating positive impacts from further rate cuts and credit rollover. PagSeguro offers an attractive yield of about 25% until 2028, considering capital distribution announced recently.

The company trades at a P/E ratio of 6.2 for 2026-2027, close to historical lows and at a discount to other Brazilian financials. UBS warns that its outlook could turn less positive if asset quality trends worsen or if payments stagnate or deteriorate, leading to gross profit pressure. Recent events, such as BofA Securities downgrading the stock to Neutral and Jefferies initiating coverage with a Hold rating, provide a more nuanced perspective on PagSeguro's prospects amid external economic pressures.