Gerdau SA, Latin America’s biggest steelmaker by market value, rose after Bank of America Corp. raised the stock to buy, saying the company is poised to benefit from a weaker Brazilian currency and rebounding steel prices.
The shares gained 5.2 percent to 13.27 reais at 1:01 p.m. in Sao Paulo. A close at that level would be the highest since June 4. It was the best performance on the benchmark Ibovespa, which slipped 0.7 percent.
Bank of America analysts including Thiago Lofiego raised Gerdau from the equivalent of hold, saying it “presents the most favorable risk-reward proposition” among Brazilian steelmakers as it is the most directly exposed to a depreciating real with about 40 percent of revenue coming from North America. “Also, we think international steel prices are close to a bottom, while results should rebound consistently after a weak first quarter,” the analysts wrote in a research note.
The real has weakened 7.9 percent this year to 2.2275 per dollar as stagnant economic growth in Brazil, violent street protests and speculation the Federal Reserve will curtail its stimulus program triggered a flight from emerging-market assets.
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