Suzano Papel e Celulose SA, Brazil’s second-biggest pulp producer, gained after the investment bank Itau BBA raised it to buy, saying a weakening real is bolstering the company’s profit outlook.
Shares advanced 0.3 percent to 7.97 reais at the close of trading in Sao Paulo. The MSCI Brazil/Materials index declined 2.2 percent.
The real sank 9.4 percent from April through June, its worst quarterly drop in almost two years, as Brazil’s growth faltered and the Federal Reserve signaled it may begin to scale back U.S. monetary stimulus that has buoyed demand for emerging-market assets. Itau BBA raised Suzano from the equivalent of hold, forecasting an average exchange rate of 2.12 per dollar that its analysts said will contribute to a 26 percent increase in profit this year.
Costs cuts, improving profitability in the paper business and higher sales volume should also help to drive “strong results” in 2013, Itau BBA analysts Marcos Assumpcao and Andre Pinheiro wrote in a an e-mailed research note to clients today. They named Suzano the top pick among pulp and paper companies and forecast earnings before interest, taxes, depreciation and amortization of 1.6 billion reais ($708 million) this year.
Suzano got 51 percent of its revenue from exports in the 12 months ended in March 2013, according to a statement on the company’s website. The real fell 0.2 percent to 2.2524 per dollar today.
Suzano has gained 14 percent this year while the materials index slumped 38 percent.