Itaú BBA upgraded its rating on Gerdau's preferred stock (GGBR4) to a buy, and the market reacted: the stock was up 5.77% at 12:17 p.m. this Thursday (October 29) to R$ 25.48, while the Ibovespa fell 3.58%. For current shareholders, the good news is clear; the remaining question is how much of it has already been priced in.
Why Is GGBR4 Rising Today?
Because Itaú BBA, according to InfoMoney, initiated a buy recommendation on the stock. The bank argues that stronger fundamentals, combined with a recent decline in the share price, have restored the attractiveness of Gerdau's risk-return profile.
“…the combination of stronger fundamentals and a recent decline in the stock price has once again made the risk-return profile attractive”InfoMoney, reporting Itaú BBA's view on Gerdau
SpaceMarkets reported the same news with a specific figure in the headline: the bank allegedly sees 29% upside potential for the stock. Based on the reports available to us, only the headlines and summaries were accessible, meaning the price target, time horizon, and the bank's previous rating were not disclosed. Any calculation of "how far the stock is from its target" would lack a solid basis, and therefore we are not performing one here.
What can be measured is the stock itself. Yesterday's close was R$ 24.09, and at the time of our check, the stock was R$ 1.39 higher, just cents away from the daily high of R$ 25.55 (the low was R$ 24.61). Trading volume reached R$ 173.3 million by that time. Because the trading session was still underway, all of these figures are subject to change by the close.
Is the Rally Driven by Gerdau or Broader Market Tailwinds?
The market offered no tailwinds; rather, it pulled lower. With the Ibovespa down 3.58%, GGBR4 outperformed the benchmark by 9.35 percentage points. The median stock in our tracking universe moved 1.73% (in absolute terms), meaning Gerdau moved more than three times that amount—a shift that slightly exceeds the 5.74% threshold we use to classify an abnormal jump for this stock.
| Asset | Change at 12:17 p.m. | Reading |
|---|---|---|
| GGBR4 | +5.77% | Upgrade target |
| GGBR3 | +7.34% | Same company, common stock |
| TUPY3 | -1.69% | Sector peer |
| SHUL4 | -2.60% | Sector peer |
| FESA4 | -2.65% | Sector peer |
| PMAM3 | -6.67% | Sector peer (under judicial reorganization) |
| Ibovespa | -3.58% | Market benchmark |
All four sector peers traded in the red, with only the two Gerdau stock classes posting gains. This points to a company-specific move rather than a broader steel sector trend. Our sources do not explain why the common stock (GGBR3) is outperforming the preferred shares (GGBR4). However, if the entire market is falling and Gerdau is rising, the bank's upgrade is the primary explanation offered by the headlines. What remains unclear is whether the fundamentals cited by the bank are the ones we are already familiar with.
What Changed at Gerdau to Prompt the Bank's Change of Heart?
Itaú BBA points to "stronger fundamentals" without detailing specifics in the texts we reviewed. The company's most recent public data comes from its third-quarter earnings report: as we noted in our Q3 2026 analysis, adjusted EBITDA reached R$ 3.8 billion (+9.9%), driven by operations in the United States, and the board approved R$ 0.34 per share in dividends. This payout equates to roughly 1.3% of the R$ 25.48 share price.
Net income also stood out. As we explained in another article on the earnings release, Gerdau posted a net profit of R$ 1.52 billion (+39.7%), even amid a decline in steel sales volume. Linking these earnings to the upgrade is our own analytical take: the bank's cited sources do not explicitly reference Q3 2026. However, the logic described fits the following framework:
The second piece deserves attention: the argument relies on the stock having previously declined. The more it rises today, the less "recent decline" remains to support the discount. This brings us back to the considerations facing investors looking to enter the stock now.
Is It Worth Buying GGBR4 Now Following Itaú BBA's Recommendation?
An analyst recommendation is an argument, not a trading trigger. Part of the upside the bank envisions has already played out today, and we do not know whether the 29% figure cited in headlines was calculated using yesterday's price or today's. If it was based on yesterday's price, the remaining upside is smaller than the headline suggests. Investors who wait for the market close and the full report details will be able to make a more informed decision.
What about GGBR3? The headlines focus on GGBR4, and the sources do not specify whether the recommendation also applies to the common shares. While the common stock is posting larger gains today, that is a price movement rather than a confirmation of the thesis.
Does an upgrade protect against a pullback? No. Consider another example from the steel and metals sector: BTG Pactual upgraded TUPY3 to a buy earlier this month, as we covered in our rating coverage, yet the stock fell 1.69% today. A major brokerage's recommendation can shift sentiment for a day, but it cannot prevent broader market pressures.
If you already hold GGBR4, the upgrade reinforces the investment thesis, but nothing fundamentally changed at the company over a 24-hour period: the earnings report and the R$ 0.34 per share dividend remain identical to yesterday's. If you are currently on the sidelines, there is no urgency that justifies buying in the heat of a rally that is bucking the broader market. What the upgrade provides is a respected institutional opinion, and investors who weigh it independently will make more confident decisions.
What to Monitor Moving Forward
Today's closing price — comparing it to yesterday's R$ 24.09 close will show whether the gains survived the entire trading session; at 12:17 p.m., the stock was trading at R$ 25.48.
The daily high — the stock traded within cents of R$ 25.55; closing well below that level would indicate that the morning's euphoria has cooled.
Itaú BBA's full report — the price target, time horizon, and previous rating will reveal the true scale of the potential upside currently known only through the 29% headline.
The Ibovespa — with the index down 3.58%, a broader market recovery could erase some of Gerdau's relative outperformance, while a worsening trend could test the resilience of the upgrade.
