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ADS of Itau Unibanco Holding S.A. (ITUB - Analyst Report) scaled a new 52-week high of $17.69 in the second half of the trading session on Aug 27. The stock closed the session at $17.64, reflecting a year-to-date return of 34.0%. The trading volume for the session was 15.73 million ADS.

Despite the strong price appreciation, this Zacks Rank #2 (Buy) stock has plenty of upside left, given the upward estimate revisions it witnessed over the last 30 days.

Growth Drivers

Impressive second-quarter 2014 results and an encouraging outlook for the remaining year were the primary growth drivers. Notably, the company reported 5.1% year-over-year growth in total assets.

Reported on Aug 6, Itau Unibanco’s second-quarter recurring earnings came in at R$5.0 billion ($2.24 billion), up 38.9% from the prior-year quarter. Results benefited from 16.7% year-over-year rise in banking service fees and income from banking charges, partially offset by 11.6% increase in non-interest expenses.

Further, the company provided a favorable outlook for the remaining year with total credit portfolio expected to grow in the range of 10%–13% and banking service fees as well as revenue of insurance, pension plan and capitalization projected to rise in the range of 12%–14%.

Itau Unibanco remains well positioned for growth on the back of diversified product mix, increasing operating revenues and enhancing asset quality as well as credit portfolio. Moreover, the bank’s consistent efforts to expand its footprint through mergers and acquisitions will likely prove to be beneficial in the future.

However, intensifying competition, elevated expenses and the stressed condition in the Brazilian economy are the major causes of concern for Itau Unibanco.

Estimate Revisions

Over the last 30 days, the Zacks Consensus Estimate for 2014 witnessed a 0.7% upward revision to $1.51 per ADS. For 2015, the Zacks Consensus Estimate narrowed 2.4% to $1.62 per ADS over the same time frame.

Other foreign banks worth considering include Arlington Grupo Financiero Inbursa, S.A.B. de C.V. (GPFOY), KB Financial Group, Inc. (KB) and Shinhan Financial Group Company Limited (SHG). All these stocks sport a Zacks Rank #1 (Strong Buy).

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