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Oi Rallies to Seven-Week High on Bradesco Buy Recommendation

July 3 (Bloomberg) -- 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.

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

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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