After a few years out of focus for analysts, the CSN (CSNA3) is regaining its prestige, in the wake of the reheating of the labor market iron ore and good prospects for the Brazilian economy.
THE Swiss credit, for example, raised the steelmaker’s target price from R $ 11.50 to R $ 19, in addition to promoting the neutral recommendation for outperform (expected performance above the market average). The value represents a high potential of 24% over the closing price of the shares in yesterday’s trading session (29).
Caio Ribeiro and Gabriel Galvão, who signed the report obtained by the Money Times, based the review on three factors. The first is the improvement in expectations for the iron ore market. The Swiss bank believes that the price of the input will remain above US $ 100 per tonne next year.
The second is the faster than expected recovery in domestic steel demand. Initially, Credit Suisse predicted a 12% drop in domestic sales, pressured by the recession resulting from the coronavirus pandemic. Now, analysts estimate a much smaller retraction – of 4% – this year.
The third point is the price adjustment announced by CSN, which should be implemented by October.
According to analysts, the sum of these factors would bring the company’s value to 3.9 times VE / Ebitda, well below its historical average of 6.5 to 7 times, and also below 6.7 times the Usiminas (USIM5).
Credit Suisse adds that this same situation will contribute to a faster reduction in the company’s indebtedness. The possible IPO gives CSN Mineração, the sale of SWT, a German steelmaker acquired in 2012, and also the sale of its 17% stake in Usiminas complete the picture outlined by the bank.
All in all, CSN is expected to become a strong cash generator for shareholders. “We see CSN deliver a strong 19% cash return in 2021”, say the analysts.
Judging by the reaction of the steelmaker’s shares in today’s trading session, investors embarked on Credit Suisse’s optimism. At 3:39 pm, they were up 7.77% and traded for R $ 16.51, while the Ibovespa advanced 1.37% and scored 94,865 points.
At the maximum of the day, so far, the stock reached R $ 16.97. At the minimum, it was quoted at R $ 15.83.