UPDATE: BMO Capital Markets Initiates Coverage on Steel Dynamics on Reasonable Balance Sheet, Dilution Potential

In a report published Wednesday, BMO Capital Markets analyst Meredith Bandy initiated coverage on

with a Market Perform rating and $18.00 price target. In the report, BMO Capital Markets noted, “BMO Research is initiating coverage of Steel Dynamics with a Market Perform rating and US$18 target price. Steel Dynamics looks more attractive based on P/E and FCF yield, but less so on P/NPV and EV/EBITDA. The balance sheet appears reasonable, but there is potential for dilution from a convertible bond due 2014. The company is leveraged to construction (residential and nonresidential) and automotive markets that have largely already rebounded.” Steel Dynamics closed on Tuesday at $17.24.