StoneCo: The Recent Drop Is A Golden Buying Opportunity (Rating Upgrade)

Summary

• StoneCo is upgraded to Strong Buy, with intrinsic value estimated well above current levels, following the drop on earnings.
• STNE expects nearly 30% shareholder yield in 2026, driven by buybacks and the special distributions post-Linx divestment.
• Management's capital ratio reduction to 17% unlocks further capital for growth and returns, while robust adjusted EPS growth continues.
• Macro tailwinds from Selic rate cuts and Brazil’s digitalization trends could further boost STNE, despite competitive and geopolitical risks.