Bear Stearns downgrades Embratel, ups price target

Bnamericas Published: Friday, June 13, 2003
Bear Stearns has downgraded its recommendation on Brazilian long-distance carrier Embratel from "outperform" to "peer perform." After a recent rally, Bear sees limited upside potential for Embratel's ADRs, which have gained more than 200% since February. The bank has revised its end-2003 price target for Embratel to US$2.60/ADR from US$1.80/ADR previously. On Wednesday, the company's receipts closed at US$2.55/ADR. Embratel's new price target follows Bear's revised country risk premium for Brazil, which was lowered from 1,000 basis points to 800 bps above US Treasuries. Starting June 16, Embratel's ADR ratio will change from 1,000 shares/ADR to 5,000. Embratel is a subsidiary of US telecom giant MCI, formerly WorldCom. by Sergio Caldas

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