Dahlman Rose Initiates Buy Rating on Metals USA (MUSA)

Dahlman Rose is out with a research report this morning, where it initiates a Buy rating on Metals USA

; it has a price target on $19.00. The Dahlman analysts said that they view the company as a low-risk vehicle to participate in the improving domestic steel market. They also noted that the company will have the opportunity to grow its earnings power through acquisitions in the fragmented service center sector. The analysts added, “The service center sector remains extremely fragmented, with nearly 3,300 service center locations operated by 1,200 companies. A number of these possible targets have been left with limited access to credit and will need to finance increasing working capital requirements. Thus, a key component of the Metals USA story is that the company will be able to opportunistically expand its geographic footprint and product offerings through the acquisition of smaller firms.”