April 11 (Bloomberg) -- BRF SA, Brazil’s largest foodmaker, rose to a record high as the investment bank Itau BBA recommended buying the stock, saying higher product prices and lower costs will boost earnings.
Shares advanced 3.7 percent to 46.89 reais at the close in Sao Paulo, the highest since the stock started trading in 1997. It was the biggest gain on the benchmark Bovespa index, which slid 1.4 percent.
Itau raised its recommendation on BRF to the equivalent of buy from hold and forecast that the shares will rise to 53 reais by year-end. The foodmaker’s earnings excluding interest, taxes, depreciation and amortization will almost double to 4.41 billion reais this year, analysts Alexandre Miguel and Felipe Cruz wrote in a note to clients today.
The estimates are based on “a lack of additional capacity and rational competition sustaining processed food prices, a highly profitable short-term scenario for poultry exports and further reductions in domestic feed costs,” the analysts wrote.
BRF has gained 11 percent this year while the Bovespa has sunk 9.1 percent.
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