UPDATE: DA Davidson Upgrades Schnitzer Steel Industries to Buy

DA Davidson raised its rating on Schnitzer Steel Industries (NASDAQ: SCHN) from Neutral to Buy and increased its price target from $32 to $36.

DA Davidson commented, "Recognizing the continued challenges faced in the first quarter, we are more optimistic regarding prospects for these shares in the next several months as scrap prices experience a seasonal rise amidst steel mill restocking in the New Year and returning export activity. Our new $36 price target (previously $32) reflects 7x our fiscal 2013 EBITDA estimate (consistent with the long-term median). Our price target reflects only 4x fiscal 2011 EBITDA – post-recessionary earnings we believe are achievable again. Ferrous scrap tends to be a leading economic indicator. We do not expect robust near-term improvement, although these shares should see an earlier recovery as the company leverages better demand from current low levels."

Schnitzer Steel Industries closed at $29.30 on Thursday.

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.