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ITUB has gained 19% in a month. HSBC now thinks the rally has run its course. Short sellers, meanwhile, have quietly been reaching the same conclusion.
HSBC's Carlos Gomez-Lopez downgraded Itaú Unibanco Holding from Buy to Hold this morning, setting a price target of $9.10. The stock closed at $9.74 on Tuesday. That puts the target roughly 7% below the last price, a notable turn from a firm that upgraded ITUB to Buy in January 2025 with a $6.80 target.
The call is straightforward: valuation. After a 19% one-month rally, Gomez-Lopez sees limited upside from here. JP Morgan still carries an Overweight with a $10.00 target, so the street is not uniformly cautious, but HSBC's reversal shifts the consensus balance from three Buys to two Buys and two Holds.
Positioning data suggests shorts were ahead of this call. Short interest in ITUB has roughly doubled over the past month, rising 93% to approximately 25.3 million shares as of 6 October. The steepest acceleration came in late September, when estimated short shares jumped from around 17 million to more than 23 million in a single week.
The cost to borrow remains extremely low at 0.47%. Borrow availability stands at 4,881% of current short interest, meaning the lending pool is abundant. This is not a squeeze setup. The rising short position reflects a deliberate directional bet, not forced covering pressure.
One wrinkle: availability did tighten sharply through early October. A week ago, availability had dropped to roughly 3,410% from above 9,500% at end-September. Since then it has rebounded to 4,881%. The cost to borrow, which spiked to around 0.50% in early October from near zero the prior week, has also drifted back slightly. The tightening appears to have been transient, tied to the surge in borrow demand as shorts built positions quickly.
The put-call ratio sits at 1.46, below its 20-day mean of 1.60 and slightly off recent highs above 1.74. Options positioning has moderated from its most defensive readings but remains skewed toward puts. The 52-week PCR high is 6.0, so the current level is not extreme.
Earnings are due 3 November, 26 days away. That date now arrives with a fresh analyst downgrade, a doubled short book, and a stock trading above the new HSBC target.
Data summary:
See the live data behind this article on ORTEX.
Open ITUB on ORTEX →ORTEX Market Intelligence content is generated by AI from a snapshot of ORTEX's proprietary data and reviewed by the ORTEX team. Content is informational only and does not constitute investment advice.
