SAO PAULO -(Dow Jones)- Lehman Brothers initiated the coverage of shares of Brazilian mining giant Companhia Vale do Rio Doce's (NYSE:RIO) (RIO) with an overweight recommendation, the investment house said Thursday in a research report for its clients.
"Vale is very well-positioned to benefit from the ongoing mining super-cycle, and we recommend that investors purchase Vale common shares at current levels," said Lehman Brothers.
In addition, the investment house set a 12-month price target for Vale's American Depositary Receipts, or ADRs, at $45. On Wednesday, the company's share closed quoted at $36.68 in New York.
Lehman Brothers said it is expecting that Vale will earn $3.02 per share in 2008 and $3.96 per share in 2009. By comparison, last year the company reported a profit of $2.41 per share.
"Vale should have significant earnings growth from 2007 to 2008 due to iron ore contract price increases (starting April 1, 2008) of 65% for its medium quality standard fines, 71% for its high quality Carajas fines, and 86.7% for its direct reduction and blast furnace pellets," said the investment house.
-By Rogerio Jelmayer, Dow Jones Newswires; 5511-6847-4521; rogerio.jelmayer@ dowjones.com
(END) Dow Jones Newswires 06-26-08 0803 Copyright (c) 2008 Dow Jones & Company, Inc.