Gafisa S.A. Affected By U.S. Crunch

Gafisa S.A. (GFA) is extremely well positioned in the Brazilian real estate market. The company is a recognized brand and has been growing through acquisitions in order to consolidate its leading position.

The recent joint venture with Tenda will enhance the company’s presence on the low-income segment. The long-term potential for growth in the local mortgage business is huge, and its massive inventory of land already acquired, as well as construction in progress, land bank and finished units is positive.

However, we are changing our current recommendation on Gafisa from Buy to Hold. The credit crunch in the U.S. banks is already affecting long-term credit lines for Brazilian banks, thus we foresee less availability of credit and higher rates in the following quarters.

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