Gerdau (GGBR4.SA): 2Q26 Preview: Estimates Raised Across the Board; Constructive into Results

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Gerdau (GGBR4.SA): 2Q26 Preview: Estimates Raised Across the Board; Constructive into Results

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13 Jul 2026 06:11:32 ET │ 15 pages

Gerdau (GGBR4.SA)

2Q26 Preview: Estimates Raised Across the Board; Constructive into

Results

CITI'S TAKE Buy

Price (10 Jul 26 18:00) R$23.01 We have updated our model ahead of Gerdau's 2Q26 results (August 4th).

Target price R$29.00↑ Our revised estimates reflect a constructive view across all three operating

segments. In Brazil, better-than-anticipated margin performance in 2Q26 from R$27.00

and a favorable domestic/special steel mix shift are driving revenue/t Expected share price return 26.0%

improvement and supporting upward estimate revisions for the remainder Expected dividend yield 6.4%

of 2026 and beyond. NAm continues to demonstrate structural resilience, Expected total return 32.4%

with elevated price levels expected to persist through 2H26 and into 2027, Market Cap R$43,104M

underpinned by a more neutral USMCA regulatory backdrop and reduced

US$8,340M political uncertainty, at least until the next U.S. election cycle. WK

consumption is expected to weigh on FCF in 2Q26, driven by higher

inventory levels, tax payments, and debt service obligations; however, this

dynamic is transitional, with materially stronger cash generation Gabriel BarraAC

anticipated in 3Q26 and 4Q26 as inventory normalizes. On balance, we +55-11-4009-2223

view the quarter as a positive inflection point with improving gabriel.barra@citi.com

fundamentals setting up a stronger 2H26.

Pedro Ferreira De Mello

+55-21-4009-0425

North America — We are raising our estimates for the North America segment pedro.mello@citi.com

meaningfully. Adj. EBITDA for 2Q26E is revised from R$2,273mn to R$2,422mn

(+7% vs Old), with the EBITDA margin holding at ~25%.