After a strong rise over the past few months, TIM Brasil 's shares have lost some momentum. At least, that's according to Citi analysts.
In a report on the telecommunications sector in the country, the bank downgraded its recommendation for the stock from buy to neutral, citing a more balanced risk-return scenario after this recent rally.
According to Citi, the change in recommendation does not reflect a deterioration in the operator's fundamentals, but rather the understanding that a good portion of the operational improvements are already incorporated into the share price.
Citi acknowledges that TIM continues to demonstrate consistent execution, customer base growth, and financial discipline, but believes that the scope for positive surprises in the short term has become more limited.
JP Morgan's view is similar in recalculating the fair value of TIM's stock. The bank also downgraded its recommendation because a large portion of profit expectations has already been priced in.
TIMS3 stock has accumulated an approximate return of 68% in the last year and 130% in the last three years. The stock is trading around R$ 24. In the few trading days of 2026, the increase is 9.9% to a market value of R$ 57 billion.
Since consolidating its position with the purchase of Oi's mobile assets in 2022, TIM has been reaping significant gains in scale, efficiency, and profitability.
The move helped boost service revenue, sustain EBITDA growth, and strengthen cash generation – factors that supported the stock's rise on the stock exchange.
According to Citi's assessment, however, the return asymmetry has decreased. "The valuation has become more demanding relative to peers, which reduces the potential for further appreciation," the bank states in the report.
A more competitive sector
The downgrade comes at a time when the Brazilian telecommunications sector is experiencing a more predictable phase from a competitive standpoint.
After years marked by price wars, high leverage, and value destruction, the market began to operate with fewer players, greater business rationality, and a focus on return on capital.
In this new scenario, the three major operators (TIM, Vivo, and Claro) are competing for growth in a more balanced way, with greater emphasis on profitability than on aggressive customer base expansion.
According to Citi, this dynamic primarily favors companies with greater operational efficiency and stronger balance sheets, but it also limits significant growth leaps, since the mobile telephony market in Brazil is nearing maturity.
"The sector remains healthy, but with more normalized returns," the bank points out, highlighting that the macroeconomic environment — especially high interest rates — also reduces the appetite for assets that have already gone through intense appreciation cycles.
For Citi, the investment thesis in telecommunications in Brazil remains valid, but with more moderate expectations. And, in this new stage of the cycle, the challenge is no longer to capture extraordinary synergies, but rather to sustain results in a mature and highly competitive market.
