On Monday, BofA Securities adjusted its stance on Loma Negra Compania Industrial Argentina SA (NYSE:LOMA), elevating the company's stock rating from Underperform to Neutral. The adjustment is accompanied by an increase in the price target to $8.10, up from the previous $7.10.
The updated rating reflects a moderately optimistic view of the mid- to long-term economic outlook for Argentina, as stated by BofA Securities. This change in sentiment is based on several key factors, including a reset in macroeconomic policy and the potential for economic recovery leading into 2025.
BofA Securities anticipates a challenging year ahead for Loma Negra in 2024, with an estimated year-over-year decline in cement volumes by 7%. However, this forecast is followed by a projected recovery of 6.0% in cement volume growth in 2025. This expected turnaround is part of the rationale behind the revised stock rating and price target.
The firm also cites the anticipated transformative impact on the energy sector from activities in the Vaca Muerta basin and lithium extraction. These developments are expected to drive industrial construction spending significantly. The positive outlook extends to both public and private construction spending in Argentina.
BofA Securities' Argentina economist, Sebastian Rondeau, projects a 4% decrease in GDP growth for the current year. Nonetheless, a rebound with a 3% GDP growth is expected in 2025, which is on the higher end of consensus forecasts. This economic projection underpins the more favorable view on Loma Negra's prospects.
InvestingPro Insights
As Loma Negra Compania Industrial Argentina SA (NYSE:LOMA) navigates the economic landscape, real-time data from InvestingPro provides a clearer picture of its financial health and market position. With a market capitalization of $795.87 million and a notable revenue growth of 190.88% in the last twelve months as of Q4 2023, Loma Negra shows signs of robust financial performance. The company's P/E ratio stands at 15.9, indicating a valuation that may attract investors looking for reasonably priced growth opportunities.
Adding to the company's appeal, Loma Negra pays a significant dividend with a yield of 13.3%, a factor that may appeal to income-focused investors. Moreover, with analysts predicting profitability this year and a trading pattern at a low P/E ratio relative to near-term earnings growth, Loma Negra stands out in the Construction Materials industry.
For those seeking additional insights, InvestingPro offers more tips on Loma Negra, which can be found at https://www.investing.com/pro/LOMA. Interested investors can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking access to a total of 9 InvestingPro Tips that further delve into Loma Negra's investment potential.
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