"Even in our conservative base-case scenario of no volume increase in Brazil's steel domestic sales in 2017 and consolidated sales volumes normalizing only in 2019 (same level as in 2014), we estimate the company to maintain positive FCF and deleveraging," analyst Ivano Westin wrote in a note.
Westin said the company's results should show gradual improvement due to better global steel outlook. Credit Suisse estimates a normalized EBITDA above $100/t, but still below the $118/t in 2010-2014.
Credit Suisse views the current momentum as an attractive entry point in the LatAm steel sector and Gerdau is the top pick its coverage universe.
At time of writing, ADRs of Gerdau were up 5.88 percent on the day to $2.52.
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