UPDATE: Goldman Sachs Downgrades Schnitzer Steel Industries to Sell on Structural Industry Challenges
Goldman Sachs lowered its rating on Schnitzer Steel Industries (NASDAQ: SCHN) from Neutral to Sell and reduced its price target from $24 to $21.
Goldman Sachs noted, "We downgrade SCHN to Sell from Neutral with 28% potential downside to our new P/E and EV/EBITDA based $21 price target (vs. 2% upside for the coverage group). We cut our FY2013 estimate by 25% (to $1.50 from $2.00) on lower margin and volume assumptions. We believe issues of shredder overcapacity, which has depressed margins for the industry, are now also impacting SCHN at its lucrative West Coast market. We see competition getting fiercer in the East Coast, too. 2013 consensus estimates for SCHN are too high, in our view, implying doubling of earnings while global steel fundamentals indicate only modest growth in steel production next year."
Schnitzer Steel Industries closed at $29.08 on Friday.
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