Cemex plunged to the lowest in three weeks in New York trading after it was cut to “underperform” from “neutral” Bank of America Corp. on valuation concerns.
Cemex’s American depositary receipts fell for a second day, losing 6.9 percent to $9.59. In Mexico City, the shares sank six per cent to 12.99 pesos.
Monterrey, Mexico-based Cemex trades at a 25 per cent premium to rivals Holcim Ltd and Lafarge based on forward earnings, Bank of America analysts said. The bank lowered its price estimate for the ADRs to $9 from $10. The U.S.-traded shares have more than doubled from the 52-week low set in March.
Cemex said it will sell its Australian operations to Holcim Ltd. for $1.6bn. Cemex tumbled after Credit Suisse Group AG said valuations “do not seem justified.” Morgan Stanley said there is “little reason” to own shares of Cemex because cement demand may remain weak until 2011 and the company may have trouble refinancing debt.
The sale of Australian assets may “signal imminent debt refinancing,” Bank of America said in the note. Cemex is in talks with creditors to refinance $14.5 billion of debt.