Goldman Sachs Lowers Steel Companies (NUE, X)

Goldman Sachs is downgrading the steel sector, as fundamentals are expected to remain weak in the near term. It cut U.S. Steel

to Neutral from and lowered its price target to $45 from $51, and Nucor went to Neutral from Buy, and $40 from $45. In the research note, Goldman writes, "With expect steel prices to remain range bound and steel fundamentals are expected to remain lackluster in the near term. There will be added competition from the newly started ThyssenKrupp's flat roll mill. We are downgrading X to Neutral from Buy. We are lowering our 2011/2012 estimates for US Steel to $3.60/$6.00 from $5.50/$7.50 on lower expected margins in its flat rolled carbon products both in the US and Europe, resulting in our new six-month, P/E-, EV/EBITDA- and M&A-based target price of $45, down from $51 earlier. We are also downgrading NUE to Neutral from Buy and lowering our 2010/2011 estimates $0.64/$2.80 from $1.14/$4.00 due to increased costs, resulting in our new 6 month P/E, EV/EBITDA and M&A based target price of $40 from $45 earlier." Shares of both companies are being hit hard this morning on the downgrades from Goldman, losing more than 1% each.