AK Steel Analyst Roundup

AK Steel Holding Corp. AKS announced Q3 earnings Tuesday. Beating the consensus was not enough for the stock as many analysts remained skeptical of the outlook.

Wednesday the stock traded at 6.23, down 1.74 percent.

Below are comments from analysts along with current ratings and price targets.

Credit Suisse - Underperform, $5.50 price target
“SepQ14 earnings were unquestionably better than the stock's -15 percent performance implied. Highlights include lower expected outage costs for the Ashland furnace reline in Q4, and healthy top- and bottom-line contribution from Dearborn. Dearborn contributed 15 days of operating results for the quarter, generating EBITDA of ~$50 per ton. We were less impressed with the operational performance ex-Dearborn, which continues to struggle with high costs and maintenance issues.”

Citi - Sell, $3.40 price target
“We continue to rate AKS Sell based on our cautious view on flat-rolled pricing and stainless steel margins. Cash outflows are forecasted to improve by $300+ mln YoY in 2015 as investments in AK Coal and Magnetation are completed. Pension contributions decline from $197 mln in 2014 to ~$35 mln in 2015 and lower maintenance and raw material costs drive improved EBITDA generation. Even with these items and ~$200 mln YoY higher forecasted EBITDA incorporated in our model we forecast -$2 mln in FCF.”

Bank of America - Buy, $13 price target
“We cut Q414E EPS to $0.08 from $0.19 and maintained our above-consensus 2015E EPS of $2.00 and 2016E EPS of $2.45 after cautious comments from management. While the market may have taken the cautious tone as a negative, we think it was appropriate conservatism given the known Ashland outage and Magnetation startup. We like the risk/reward and think its contract profile and variable costs offset price concerns. Our $13 [price target] reflects 6x 2015E EV/EBITDA, versus an average forward 7.7x EBITDA.”