Shares of U.S-traded industrial metals companies based in Latin America shot higher on Friday after an analyst reiterated top ratings on Brazilian steel makers, predicting steel prices would rise through 2009.
Citi Investment Research analyst Alexander Hacking maintained his "Buy" ratings on shares of Brazilian steel makers Ternium SA and Gerdau SA in a note to investors, saying first-quarter earnings support the shares' recent gains.
Earlier in May, both Ternium and Gerdau said first-quarter profits rose compared with the year-ago quarter, sending shares of both companies higher. Gerdau shares have risen more than 2 percent since reporting its earnings May 5, while Ternium shares have climbed over 4 percent since its May 5 earnings release.
Hacking said he expected steel prices to continue rising into 2009, with Brazilian steel stocks poised to benefit.
Ternium, in particular, will benefit as it sheds its Venezuela holdings and consolidates its holdings in Mexico. The company is also well-insulated from raw materials cost, Hacking said.
He assigned a price target of $47 to Ternium, implying he expects the stock to gain nearly 30 percent. Hacking did not assign a target to Gerdau ADRs.
Ternium gained $2.76, or 7.6 percent, to $39.04. Gerdau rose $2.88, or 6.3 percent, to close at a fresh 52-week high of $48.87 _ breezing past its prior peak of $46.
Other Latin American industrial metals stocks climbed. Brazil's Companhia Siderurgica Nacional added $1.72, or 3.5 percent, to $50.94. Mexico's Grupo Simec SA de CV jumped 29 cents, or 2.1 percent, to $14.39. Tenaris SA added $1.27, or 2.2 percent, to $59.15, after rising to a new 12-month high of $59.20 earlier.
The broader ADR market also advanced. The Bank of New York Latin America ADR Index climbed 11.48 points, or 2.3 percent, to 502.10. The Bank of New York Composite ADR Index rose 2.05 points to 188.85.
ADRs, or American Depositary Receipts, are securities that allow overseas companies to trade on U.S. markets.
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