Cia. Energetica de Minas Gerais, Brazil’s second-biggest electric utility by market value, rose to the highest in five weeks after Itau BBA raised its rating on the stock amid forecasts for higher power prices.
Belo Horizonte-based Cemig’s shares advanced 1.7 percent to 23.59 reais at 12:43 p.m. in Sao Paulo, the biggest intraday rise since Jan. 22. Brazil’s benchmark Bovespa index fell 0.6%.
Rising electricity consumption by businesses and households, coupled with restrictions on hydropower generation, are pushing up wholesale power prices in contracts as well as the open market, according to Marcos Severine and Mariana Coelho, analysts with Itau BBA. The analysts raised their 12-month target price to 29 reais per share from 28 reais and upgraded the stock to the equivalent of buy from hold.
“The energy-supply ’crisis’ Brazil entered toward the end of last year has marked, we believe, the beginning of an upward trend in long-term energy prices,” the analysts wrote in a report dated yesterday.