UBS sets Usiminas stock neutral with R$7.00 target

Published 12/03/2025, 11:22
UBS sets Usiminas stock neutral with R$7.00 target

On Wednesday, UBS analysts initiated coverage on Usiminas (USIM5:BZ) (OTC: OTC:USNZY) with a Neutral rating and a price target of R$7.00. The flat steelmaker has experienced significant challenges over the past decade and a half, including changes in control, shareholder disputes, operational incidents, and major asset shutdowns. These issues have led to the stock trading at a low multiple, specifically at just 0.3x its projected 2025 Price-to-Book value. InvestingPro data shows the company is currently undervalued, with a market capitalization of $1.24 billion and weak gross profit margins of 6.42%.

UBS’s coverage begins as the company shows signs of potential recovery under the new management of Ternium, recognized as one of the leading steel operators in Latin America. The analysts see a "light at the end of the tunnel" for Usiminas but also caution that the path to recovery may be uneven and will likely take time. According to InvestingPro analysis, the company maintains a strong liquidity position with a current ratio of 3.64 and operates with a moderate debt level, providing some stability during the recovery phase.

According to UBS analysts, there is now increased visibility on how Usiminas might return its margins to normalized levels of around 15%, compared to the current approximate 6%. However, they note that a full recovery is not immediate and that the stock’s partial recovery appears to be already factored into its current valuation.

The stock is currently trading at 3.2x its estimated 2025 EV/EBITDA and is generating a free cash flow yield of around 5%, which the analysts believe fairly represents the company’s financial outlook. The price target of R$7.00 reflects UBS’s assessment of the stock’s fair value based on these projections.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.