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Morgan Stanley upgrades Usiminas, Gerdau

Bnamericas Published: Wednesday, June 10, 2009
Morgan Stanley has upgraded Brazilian steel companies Usiminas and Gerdau (NYSE: GGB) to overweight and equal weight, respectively, from underweight. The target price for preferred A shares in Usiminas, Morgan Stanley's top pick among Latin America's steel companies, was raised to 46 reais/share from 28 reais/share. Preferred shares in Gerdau were raised to 23 reais/share from 12 reais/share. In the case of Usiminas, Morgan Stanley said it has the most exposure to Brazil and benefits from an early bottoming of steel demand and utilization in the country. Morgan Stanley said: "The company has underperformed its peers and is trading at a discount to normal Ebitda/per metric ton, making it attractive in a flows-driven rally."

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