Brazil Homebuilders Rally as BofA Sees Rebound: Sao Paulo Mover
Gafisa advanced 3.2 percent to 3.20 reais at 1:59 p.m. in Sao Paulo, the biggest gain on the BM&FBovespa Real Estate index, which added 0.9 percent. Shares of Rio de Janeiro-based PDG Realty SA Empreendimentos e Participacoes (PDGR3), Brazil’s second-biggest homebuilder by sales, rose 2.6 percent to 2.36 reais.
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 (RSID3) and MRV Engenharia e Participacoes SA (MRVE3) to hold from sell. Rossi gained 3.1 percent to 3.01 reais. MRV added 2.6 percent to 9.02 reais, the highest since April 12.
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