Gafisa S.A.'s (Gafisa) 1Q 09 revenues were marginally below our expectations while earnings fell short due to higher-than-anticipated operating expenses. Management guidance for FY 2009 exceeds our expectations. Given current price levels, we upgrade our common stock rating from a SELL to a HOLD. We will reassess our common stock rating for Gafisa in our next full update report. We now expect a significant positive currency impact1 on the ADR (1 ADR = 2 common shares)...

Despite the weak economic environment in Brazil, we continue to expect an increase in the company’s real estate development and sales business given the scope provided by Brazil’s housing deficit, which was estimated to be approximately 7.5 mn housing units in 2008, according to the Global Property Guide. Moreover, in March 2009, in an initiative to curb the shortage of low income housing and boost…

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Gafisa S.A.’s (Gafisa) common stock price has increased significantly since we upgraded it from a HOLD to a BUY in our previous company news alert, dated 21 January 2009, and achieved our target price on 03 February 2009. The stock price rallied as investors reacted positively to a proposed Brazilian economic stimulus package and further interest rate cuts by the Brazilian central bank. According to a Bloomberg report, dated 03…