Zacks Investment Research upgraded shares of Companhia Siderurgica Nacional (SID) from UNDERPERFORM to NEUTRAL on May 29, 2012, with a target price of $7.00.
CSN's first quarter 2012 was not impressive as the results were plagued by rising cost of materials, weak margins and lower profits. Earnings in the quarter were pulled down to just 4 cents per ADR, lagging behind both the year-ago earnings as well as the Zacks Consensus Estimate of 25 cents per ADR. Moreover, rising competition, higher debt levels are the major impediments to growth. Despite the negatives we have upgraded the stock from Underperform to a Neutral recommendation, being positive on the growth prospects of the company. Worldwide steel consumption is on the rise with Brazilian demand ever soaring as the country gears up to host major sporting events. Moreover, government spending on agricultural equipment and infrastructure are increasing indicating higher steel demand in the years to come. Moreover, the company's diversification portfolio is a boon with non-core business accounting for roughly 40% of revenues
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