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+44 (0)20 7232 3090 Traded on


AIM, London
Fax +44 (0)20 7232 3099 Stock Exchange

www.iirgroup.com Regulated and


LSE: IIR authorised by

Gafisa S.A. 24 June 2008

Company News Alert

Significant common stock price decline

Common BUY The Gafisa S.A. (Gafisa) common stock has depreciated by 21.1% since our 4Q 07 and FY 2007
update report, driven by negative market reaction to rising interest rates and falling housing demand
Stock in Brazil. Further, surging oil prices have led to weakness in world financial markets. In view of the
weakness in the housing market, we expect to lower our estimates and target price in our next full
Ticker: GFSA3.SA update report. However, there remains a substantial housing deficit in Brazil, which ensures that the
sector will grow robustly over the longer term. Therefore, at current levels, we believe the common
Target price: BRL36.78 stock is an attractive investment opportunity and therefore upgrade it from a HOLD to a BUY.
Current price: BRL28.80
Price change We will reassess our common stock rating for Gafisa in our next full update report.
(21.1%)
since last report:

ADR BUY We maintain our current BUY rating for the ADR, as we continue to anticipate a significant positive
currency impact on the ADR over our investment horizon.

Ticker: GFA
Target price: US$56.41
Current price: US$35.86
Price change We will reassess our ADR rating for Gafisa in our next full update report.
(17.7%)
since last report:

Supervisor: Shilpen Shah


Analyst: Jayant Saboo Investment horizon - short term actionable trading strategies
Editor: James Smithies
This report addresses the needs of strategic investors with a long term investment horizon of 6-12 months. If this
Global Research Director: report is provided to you by your broker under the Global Settlement, you may now also access (free of charge) the
Satish Betadpur, CFA short term trading outlook that we publish from time to time for this issuer, looking at the coming 5-30 days for
readers with a shorter trading horizon. These are available online only at www.researchoracle.com.
Next news due:
2Q 08 results, 05 August 2008
In our 4Q 07 and FY 2007 update report, dated 02 May 2008, we reiterated the Gafisa common stock
a HOLD on fundamental grounds, with a target price of BRL36.78 and a potential upside of 1%.
However, the Gafisa common stock has depreciated 21.1% since then.

This decline reflects investor concerns over the negative impact of rising oil prices and inflation, which
are expected to lead to tightening of monetary policy in Brazil. This, in turn, is expected to weaken the
domestic housing market. The downward pressure on the common stock has been compounded by
the rise in oil prices, which has led to weakness in stock markets around the world. The Brazil
BOVESPA Index has declined 6.8% since our last update report.

Given the anticipated weakening in the domestic housing market, we expect to lower our estimates
and target price when we revalue the company in our next full update report. However, there remains a
substantial housing deficit in Brazil, which ensures that the sector will grow robustly over the longer
term. Therefore, at current levels, we believe the common stock is an attractive investment opportunity
and therefore upgrade it from a HOLD to a BUY.

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