UPDATE: Jefferies Downgrades Schnitzer Steel Industries to Underperform, Reiterates $25 PT as Recycling is Expected to Remain Weak, Stock is Overvalued

In a report published Monday, Jefferies analyst Luke Folta downgraded the rating on Schnitzer Steel Industries SCHN from Hold to Underperform, but reiterated the $25.00 price target. In the report, Jefferies noted, “We see the recent expansion in valuations for SCHN unsupported by underlying business fundamentals and see the shares overvalued relative to reasonable earnings prospects. While overall steel mkt. conditions have improved as of late, we see worsening shredder overcapacity and weakening non-ferrous metal prices continuing to pressure margins in its core recycling business and have no basis for increasing our $25TP, which implies -16% downside.” Schnitzer Steel Industries closed on Friday at $30.72.