Brazilian homebuilders rallied, sending Gafisa SA to a three-week high, after Bank of America Corp. predicted a rebound as the pace of construction quickens.
Gafisa advanced 4.5 percent to 3.24 reais at the close of trading in Sao Paulo, the highest since Aug. 16. Shares of Rio de Janeiro-based PDG Realty SA Empreendimentos e Participacoes, Brazil’s second-biggest homebuilder by sales, rose 4.8 percent to 2.41 reais. The BM&FBovespa Real Estate index added 2.1 percent.
Home construction climbed 20 percent in the first six months of the year to 65,000 units, “boding well for cash generation and margins normalizing at higher levels,” Guilherme Vilazante, Daniel Gasparete and Carlos Peyrelongue, analysts at Bank of America, wrote in the note dated yesterday. “The market still largely downplays this turnaround.”
The bank raised its recommendation on PDG to buy, making it one of the top picks in the industry along with Gafisa.
Bank of America also increased its recommendation on Rossi Residencial SA and MRV Engenharia e Participacoes SA to hold from sell. Rossi gained 2.1 percent to 2.98 reais. MRV added 6.5 percent to 9.36 reais, the highest since April 11.