Usinas Siderurgicas de Minas Gerais SA, the Brazilian steelmaker that posted net losses in two of the past five quarters, jumped to the highest in more than a month after Goldman Sachs Group Inc. (GS:US) recommended buying the stock.
Preferred shares of Usiminas, as the Belo Horizonte, Brazil-based company is known, gained 5.7 percent to close at 7.01 reais in Sao Paulo, the highest since June 20. The company’s voting shares, a less traded type of stock, climbed 6 percent, leading gains in the Brazilian benchmark Bovespa index today. The preferred stock has tumbled 31 percent this year while the common stock has dropped 53 percent.
Usiminas is Goldman’s new top pick within Latin American steel stocks, analysts led by Marcelo Aguiar in Sao Paulo said in a note to customers today after upgrading their recommendation on the equity to buy from sell. The company stands to profit from a recovery in Brazil’s flat steel demand and an operational “turnaround” after the entrance of the Techint Group in the controlling shareholder group, they said.
“We expect Usiminas to outperform peers and the broader market in the next 12 months as in our view operating turnaround will begin to materialize throughout the second half of 2012,” the analysts said. “Risk/reward has become compelling for Usiminas shares.”
Techint, through its Ternium SA (TX:US) and Tenaris SA (TEN) units, on Nov. 27 agreed to pay 5.03 billion reais for a 27.7 percent voting stake in Usiminas, teaming up with Nippon Steel Corp. (5401) to control Usiminas.
Usiminas is scheduled to report second-quarter earnings after the market closes today. The steelmaker is expected to post a net loss of 221.3 million reais excluding some items, the average of seven analysts in a Bloomberg survey.
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