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The analysts explained that they hosted Ternium’s top management in a non-deal roadshow, with the topics discussed including steel growth prospects in the Americas, the future of Usiminas (OTC:USNZY), the PesquerÃa expansion, and ESG positioning.
“The conversations support our conviction in our Overweight rating on TX shares, which we think are undervalued and offer an attractive risk-reward,” wrote the analysts.
They added that the company’s management is optimistic about its operations in Brazil in the medium term, as they expect the manufacturing sector there to grow, as happened in Mexico 10 years ago.
Overall, they feel “TX profitability has reached an inflection point, and in the past, this has proven a good entry point for the stock.”
“The company has a strong balance sheet with a net cash position, even considering ongoing growth investments, and we expect it to pay an attractive dividend that is underestimated by the market,” the analysts added.
