Itau Unibanco Banco Multiplo S.A. (Itau-Unibanco) reported robust top-line, exceeding our expectations. However, bottom-line was closer to our expectations. Although the bank also reported a significant y-o-y rise in its provision expenses due to rising defaults, based on better-than-expected results and signs of economic recovery, we expect to revise our target price and estimates upwards in our next update report. In light of this, although the current price does not support a BUY rating, we upgrade the preferred stock from a HOLD to a BUY. We will reassess our preferred stock rating and target price in our next update report. Although we expect to increase our preferred stock target price in our next update report, as we continue to anticipate a negative currency impact on the ADR over our investment horizon, we maintain our HOLD rating for the ADR. We will reassess our ADR (1 ADR = 1 preferred share) rating in our next update report.

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