BofA raises Gerdau recommendation and sees US as top destination for steel

BofA (Bank of America) raised its recommendation on Gerda, saying it sees the United States (US) as an attractive destination for steel. In a report to clients and the market this Friday (May 24, 2024), the steelmaker had a neutral-high recommendation to buy.

The bank has updated its steel coverage in Latin America with first-quarter results and results from the metals, mining and 41st global conference. Steel. Recommended by BofA Less efficient Revised target price for CSN from R$13 to R$14. For Gerdau, the target price rose to R$25 from R$21.

“With weak demand from China and exports approaching 100 million tonnes per year, isolated and protected markets such as the US have a better outlook with increasing demand for infrastructure investments and relocation trends.”Analysts point out.

Ternium, a buy, will benefit from better trends in the US market, they note.

According to analysts Caio Ribeiro, Leonardo Neratika and Guilherme Rosito, Gerdau’s profits would have reached a minimum in Brazil. “Cost-cutting efforts will mainly materialize in the third quarter, with an improved sales mix and limited impairment to revised prices given favorable import parity vis-à-vis Turkey and China.”

As for North America, the recent correction in US metals could hurt Gerdau’s data as it spreads from the March peak, but BofA expects healthy margins of 23% in 2024. Among the reasons, analysts point out that there will be a gradual improvement in demand. . Represents around 60% of the company’s Ebitda.

As for CSN, BofA is cautious Iron ore And with the company’s debt, an increase in the premium for importing flat steel and the absence of major cost-cutting incentives, the steel segment does not expect major improvements.