Oi SA rose to a seven-week high after Banco Bradesco SA’s brokerage raised its recommendation to the equivalent of buy on expectations for improved revenue and a new dividend distribution plan.
Shares gained 6 percent to 9.01 reais at the close in Sao Paulo, the highest since May 14. The benchmark Bovespa index rose 2 percent.
“The market is underestimating the company’s capacity to stop deterioration of revenues, which could lead to a positive surprise,” Luis Azevedo and Tales Freire, analysts at Bradesco, wrote in a note to clients dated yesterday. “The company is also implementing a bold dividend distribution plan, which we believe should continue to support the stock price.”
The fixed- and mobile-telecommunications company said in a regulatory filing in May that net income attributed to controlling shareholders was 345.2 million reais ($171 million). The average estimate of four analysts surveyed by Bloomberg was for adjusted profit of 152.8 million reais.