The shares of Brazilian fintech firm StoneCo (STNE) are retreating 4% after Citi downgraded the shares in a note to investors earlier today.

A Look at Citi's Downgrade of STNE Stock

Citi analyst Gustavo Schroden cut his rating on STNE to Neutral from Buy.

After Brazil's central bank increased its benchmark lending rate by one percentage point to 12.25% in December and indicated that the rate could jump to 14.25% this year, Schroden expects STNE to be hurt by the moves.

Specifically, he thinks that its costs will rise while its transaction volumes will decline and it will be negatively impacted by adverse macroeconomic catalysts.

Further, the analyst believes that STNE may wind up having to cut its 2027 net income guidance.

Additional Information About STNE

The company announced a new share buyback program worth about $330 million in November. The initiative replaced a previous share buyback program that was capped at roughly $165 million.

STNE stock is currently changing hands at a forward price-to-earnings ratio of just eight, while its forward Enterprise Value/EBITDA ratio is only 3.1.

In the last month, the stock has risen 4%, but it has tumbled 24% in the last three months and it has tumbled 52% in the last 12 months.

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