(Corrects percentage change for Ebitda estimate in fifth paragraph.)
Usinas Siderurgicas de Minas Gerais SA, Brazil’s second-biggest steelmaker by output, rose the most in three weeks as Credit Suisse Group AG (CSGN) recommended the stock, citing its attractive valuation and the potential for improved profits.
Usiminas, as the company is known, gained 8.4 percent to 7.10 reais at 11:52 a.m in Sao Paulo. Earlier the stock surged as much as 9.3 percent to 7.16 reais in the steepest intraday advance since June 25. The Ibovespa stock benchmark added 1.1 percent.
After losing 49 percent this year, Usiminas is “a low-hanging fruit,” Credit Suisse analysts including Ivano Westin wrote in a note to clients today. The investment bank expects the steelmaker’s gains to increase this year as a weaker Brazilian currency allows for “possible market share gains” and higher prices in the domestic market.
The real depreciated 10 percent in the second quarter.
Usiminas trades at 5.9 times estimated earnings before interest, taxes, depreciation and amortization for 2014, or a 10 percent discount compared to global peers, according to Credit Suisse calculations. The bank expects Usiminas’s Ebitda to increase by 41 percent next year to 1.97 billion reais ($870 million).
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