Usiminas Rallies as Bank of America Says Buy on Price Increase

Usinas Siderurgicas de Minas Gerais SA (USIM5) headed to the biggest weekly gain in five months as Bank of America Corp. recommended buying Brazil’s third-largest steelmaker on prospects that higher prices will boost earnings.

Preferred shares of the Belo Horizonte, Brazil-based company gained 3.6 percent to 14.41 reais at 1:07 p.m. in Sao Paulo, extending a weekly advance to 10 percent, the biggest since July 26. Rival Cia. Siderurgica Nacional (CSNA3) SA rose 1.8 percent to 13.89 reais, the highest intraday price since Sept. 14, 2012. The benchmark Ibovespa index added 0.5 percent.

Bank of America expects Usiminas to raise the prices of its products by 6 percent to 7 percent in 2014, which should help boost earnings before interest, taxes, depreciation and amortization by 80 percent in the next two years as the company cuts costs and domestic demand rises, according to a note to clients yesterday by analysts Thiago Lofiego and Karel Luketic.

Usiminas’s press office declined to comment on the outlook for prices increase.

Usiminas’s Ebitda will more than double to 1.71 billion reais ($730 million) this year from 2012, according to the average estimate of 16 analysts surveyed by Bloomberg.

To contact the reporter on this story: Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net

To contact the editor responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net

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