Bci Raised Its Earnings Forecast by 4.6 Points. Its IPSA Target Moved 1.3%.

Markets

The new Bci IPSA target is twelve thousand and fifty points, and the number that explains it is not that one.

Bci’s brokerage lifted its forecast for how fast Chilean listed earnings will grow this year from fifteen point two percent to nineteen point eight.

That is a four and a half point upgrade to the engine of any equity valuation. The target moved one and a quarter percent.

What the Bci IPSA target is really saying

A large earnings upgrade producing a small target move means something else moved the other way. In this case, two things did.

The brokerage cut its Chilean growth forecast to one percent and raised its inflation projection to three point seven percent. Better company profits, worse economy.

Those two forces nearly cancelled, which is the honest summary of the Chilean market right now. Corporate results are improving while the ground underneath them is not.

Against Tuesday’s level near ten thousand nine hundred and seventy, the target implies just under ten percent upside. It also implies clearing January’s all-time high of eleven thousand seven hundred and twenty-one, set the day Kast was inaugurated.

Three stocks carrying a third of the case

The earnings upgrade looks broad until you open it. It is not.

SQM contributes fifteen point six percent of the projected growth, Banco de Chile eleven point one, and Latam Airlines eight point seven. Three names account for more than a third of the total.

Unpack what each depends on. SQM needs lithium and pulp prices to keep recovering, Latam is extrapolating from one strong first quarter, and the banks benefit precisely because inflation is running hotter.

So the nineteen point eight percent earnings forecast is, in substance, a bet on lithium, one airline and elevated inflation. That is a narrower proposition than an index-level number suggests.

The models disagree by thirteen percent

Bci blends three approaches, and their outputs sit remarkably far apart. The bottom-up model, valuing each constituent by discounted cash flow, produces twelve thousand eight hundred and thirty-five.

The risk-premium model, comparing Chilean equities against government bonds, produces eleven thousand three hundred and two. That is a spread of nearly fourteen percent between two views of the same index.

The bottom-up model carries the heaviest weight at forty percent, and it is also the most generous, partly because it reaches into 2027 cash flows rather than stopping at this year. The top-down model sits between them at eleven thousand six hundred and seventy-seven, assuming growth of one percent, copper at five dollars eighty a pound and the dollar at eight hundred and eighty pesos.

One number in the risk-premium work deserves attention on its own. Investors still demand five point one percent above government bonds to hold Chilean equities, above where that premium sat before both the pandemic and the 2019 unrest.

The bull case is a bill

Bci’s optimistic scenario has the corporate tax rate falling and earnings rising twenty-three percent, taking the index to twelve thousand four hundred and thirty-two. Its pessimistic case, on tense geopolitics and inflationary pressure, gives ten thousand seven hundred and fifty-four.

Note where the headline target falls. Twelve thousand and fifty sits below the reform scenario, meaning the base case does not assume the tax cut passes in full.

That is a defensible read. Kast’s coalition lacks a majority, the reform cleared its first vote narrowly, and its signature tax-stability clause has already wobbled in committee.

Which makes the target less a forecast about Chilean companies than a probability weighting on Chilean legislators. Bci calls its number one of the most conservative in the market, and against Banchile’s thirteen thousand it is lower, though the pessimistic scenario still sits about two percent below where the index trades today.

What is the new Bci IPSA target?

Twelve thousand and fifty points for end-2026 and early 2027, raised from eleven thousand nine hundred. Against a level near 10,970 on Tuesday that implies roughly ten percent upside, and would take the index past its January record.

Why did the target barely move despite the earnings upgrade?

Because Bci cut its GDP forecast to one percent and raised inflation to three point seven in the same revision, offsetting most of the benefit of stronger profits. The result is a market where company results improve while the macroeconomic backdrop deteriorates.

What would push the IPSA higher?

The corporate tax cut from 27% to 23%, which Bci models as lifting earnings 23% and the index to 12,432 points. Since the government lacks a congressional majority and the bill has already stumbled in committee, that scenario depends on legislative arithmetic rather than corporate performance.

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