UPDATE: Bank Of America Upgrades AK Steel Holding On More Compelling Risk/Reward

In a report published Monday, Bank of America analyst Timna Tanners upgraded the rating on AK Steel Holding Corporation AKS from Neutral to Buy, and raised the price target from $9.00 to $10.00. In the report, Bank of America noted, “We upgrade AKS to Buy from Neutral on: 1) better global electrical steel demand, 2) falling iron ore costs into H2, and 3) an improving FCF story into 2015E. AK is the only beneficiary of lower iron ore prices of our coverage universe, as even with its Magnetation investment it still relies on third party iron ore for half its needs. "Recent two-year low iron ore prices should start to benefit AK in Q314 and further in Q414. AK operations should be back to normal by Q3 with the return of its Ashland, KY furnace in late Q1 and after playing catchup with customers. While we still expect lower carbon steel prices in H2, our upgrade reflects sustained low valuation and a newly more positive view on electrical steel, with channel checks expecting better H2 pricing and demand globally, which can particularly help 2015E pricing.” AK Steel Holding closed on Friday at $6.42.