Usiminas (USIM5): 2 Major Banks Raise Target Price Amid Dividend Buzz—Is It Time to Buy in 2025?
- Why Are Citi and Safra Bullish Yet Cautious on Usiminas?
- The Steel Sector’s Make-or-Break Timeline
- Dividend Dreams vs. Financial Reality
- FAQ: Your Usiminas Investment Questions Answered
Two heavyweight banks have just upped their target prices for Usiminas (USIM5) following its Q3 earnings report and hints of potential 2025 dividends—but they’re still playing it cool with "neutral" ratings. Here’s why analysts are torn on this Brazilian steel giant, and whether the stock’s 36% rally since August still has legs.
Why Are Citi and Safra Bullish Yet Cautious on Usiminas?
Citi bumped its target from R$4.75 to R$5.50, praising Usiminas’ stronger cash Flow and updated macroeconomic assumptions. The bank highlighted management’s 2025 dividend teaser as a "constructive signal," projecting a juicy 9.8% yield by 2026 if payouts hit 100%. But there’s a catch—heavy investments post-2027 could squeeze cash flow. Meanwhile, Safra jacked its 2026 target to R$6.20 (14% upside) but warns the stock’s recent surge already prices in most positives. Both banks note Usiminas’ Q3 struggles: a R$3B net loss and R$2B asset impairment hit. Yet they’re oddly optimistic—Citi cheered the 0.16x net leverage and positive FCF, while Safra sees EV/EBITDA at just 3.2x for 2027 (below its 4.1x historical average).
The Steel Sector’s Make-or-Break Timeline
Citi’s betting on a 2026 turnaround fueled by: 1) PCI project ramp-up, 2) automotive/industrial demand recovery, and 3) price rebounds. But delayed anti-dumping measures (now expected by Q1 2026) could prolong pricing pain. "If these protections flop, domestic prices might stay weak through 2027," cautions the report. On mining, Citi’s wary—their global iron ore forecast shows declining prices through 2026, capping profitability. They’re ignoring expansion rumors until management clarifies.
Dividend Dreams vs. Financial Reality
While Usiminas’ potential 2025 dividends are turning heads, Safra’s Ricardo Monegaglia notes the stock’s 36% rally since August leaves little short-term upside. The bank revised its 2026 EBITDA to R$1.9B (still 15% below consensus), banking on stronger domestic prices and a favorable BRL exchange rate. Risks? Steel/iron ore price swings, demand shocks, trade policy changes, and capex surprises. BTG Pactual sees it as an event-driven trade—pending anti-dumping decisions could spark volatility.
FAQ: Your Usiminas Investment Questions Answered
What’s driving Usiminas’ recent stock surge?
The 36% gain since August reflects Optimism around potential 2025 dividends and anti-dumping protections, though analysts warn much of this is already priced in.
How safe are the projected 2026 dividends?
Citi models a 9.8% yield assuming 100% payout, but warns heavy post-2027 investments could make sustained high payouts tricky.
Why maintain "neutral" ratings after raising targets?
Both banks see limited catalysts until 2026—Safra notes the stock trades at just 3.2x 2027 EV/EBITDA, but lacks near-term drivers.
