Bloomberg News

MRV Advances as Morgan Stanley Raises Stock to ‘Overweight’

October 10, 2011

(Updates with closing prices in second paragraph.)

Oct. 10 (Bloomberg) -- MRV Engenharia & Participacoes SA, Brazil’s fourth-biggest homebuilder by revenue, rose to a three- week high after it was raised to “overweight” from “equal- weight” at Morgan Stanley.

Shares advanced 4.7 percent to 10.57 reais at the close of trading, the highest since Sept. 21. The benchmark Bovespa index gained 4 percent.

MRV’s focus on low-income housing “is an advantage compared to other homebuilders in a slowdown scenario,” Morgan Stanley’s analyst Rafael Pinho wrote in a note to clients today. “Low-income clients do not postpone the purchasing decision if financing fits their pocket and unemployment remains low, which we believe is likely to be the case going forward.”

Morgan Stanley has a 12-month estimate of 14.6 reais for the stock.

Rival Cyrela Brazil Realty SA Empreendimentos e Participacoes, the country’s second-largest homebuilder, gained 5.4 percent to 12.51 reais, the most since Aug. 29, after Morgan Stanley boosted its recommendation to “equal-weight” from “underweight.” Concerns about the company’s profit margins are “fairly priced-in at current levels,” according to the report.

--Editors: Richard Richtmyer, Glenn J. Kalinoski

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos in New York at papadopoulos@bloomberg.net


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