BCH -1.48% in 1 month due to earnings underperformance and short interest rise

On JAN 2 2026, BCH dropped by 0.44% within 24 hours to reach $590.8, BCH dropped by 5.11% within 7 days, dropped by 1.48% within 1 month, and dropped by 1.48% within 1 year.

Short Interest Surges 32.7%, Signaling Investor Pessimism

Short interest in Banco De Chile (BCH) rose 32.7% as of December 15, 2025, reaching 426,855 shares. This increase marked a notable shift in investor sentiment. The days-to-cover ratio stands at 1.9, indicating a moderate but increasing bearish outlook among traders. At 0.1% of the float, short positions remain relatively low but are rising sharply compared to previous periods.

The surge in short interest follows a recent earnings miss and persistent underperformance relative to revenue expectations. The stock has remained under pressure despite institutional activity showing increased buying from key investors, including TT International and Qube Research.

Institutional Investors Adjust Positions Amid Volatility

Institutional activity has been mixed. TT International Asset Management acquired a new position valued at approximately $27 million during the third quarter. Qube Research & Technologies Ltd significantly increased its stake by 199.1%, holding 352,465 shares as of the end of Q3. Similarly, Marshall Wace LLP boosted its position by 177.7%, holding 298,085 shares. Together, these institutional players now account for 1.24% of the stock’s ownership, though this figure remains relatively small compared to broader institutional investor activity in large-cap stocks.

Despite these institutional investments, the broader market has remained cautious. Analysts maintain a consensus "Hold" rating for the stock, with an average price target of $34. The stock currently trades near $38.08, above the target range, suggesting a potential for correction.

Earnings Performance Lags Behind Forecasts

Banco De Chile reported quarterly earnings of $0.60 per share on October 30, 2025, falling short of the expected $0.62 by $0.02. Revenue for the quarter reached $764.93 million, below the projected $831.97 million. The earnings shortfall contributed to a negative reaction in the stock price and reinforced the recent trend of underperformance. The earnings report highlighted a return on equity of 23.25% and a net margin of 32.87%, both metrics indicating solid profitability. However, the failure to meet expectations has led to investor skepticism, particularly in a market environment where earnings precision is increasingly valued.

Analyst Outlook Remains Neutral Amid Mixed Fundamentals

Analysts project earnings per share of 2.31 for the current fiscal year, reflecting a modest improvement in the near term. However, this forecast has not yet translated into investor confidence. Four analysts currently rate the stock as a "Hold," with no strong buy or sell recommendations.

Goldman Sachs and JPMorgan have raised their price targets, signaling a cautiously optimistic outlook, but the overall market sentiment remains neutral. The stock’s beta of 0.23 suggests it is less volatile than the broader market, but its earnings volatility and recent short interest rise are key concerns.

Market Position and Operational Overview

Banco De Chile is one of the oldest and most established financial institutions in Chile, founded in 1893. It serves a diverse range of clients, including retail, corporate, and institutional customers, and operates under Chilean banking regulations. The bank offers a wide array of financial services, including investment banking, commercial banking, and retail banking.

Despite its strong presence in the domestic market, the stock has struggled to gain traction with international investors, who remain focused on more predictable earnings growth and stable cash flows. The recent earnings shortfall and short interest increase may further delay any significant price correction to its current elevated level.