Skip to main content

Market Overview

Credit Suisse Bullish On Steel Sector

Share:
Credit Suisse Bullish On Steel Sector

Credit Suisse’s Curt Woodworth initiated coverage of the US Steel Sector with a bullish view. He mentioned that the US market seemed to be close to a cyclical low point for volume and pricing, and the outlook for both is very strong for the rest of 2016.

Global demand seems to be in a strong recovery mode, backed by a seasonal upswing in Chinese demand, while there has been a slow ramp in global supply following curtailments during end-2015.

Global prices have surged over the past several months and “we believe US prices are likely to experience the strongest recovery as not only will prices increase with the global market but premiums to foreign material should expand from trade case protection,” analyst Curt Woodworth wrote.

Outperform Ratings

The price target for Steel Dynamics, Inc. (NASDAQ: STLD) is at $25. The company is America’s lowest cost flat rolled producer, with the highest earnings leverage to a recovery in the US flat rolled market. The analyst expects EAF metals spreads for sheet products to widen significantly in 2Q, providing EPS upside to Street expectations. Steel Dynamics has strong potential for organic growth on mix upgrades.

The price target for United States Steel Corporation (NYSE: X) is at $19. The company is expected to generate high incremental margins as volume recovers. Woodworth believes that States Steel would beat FCF and EBITDA expectations for 2016. The company has the highest leverage to spot market recovery, he added.

Neutral Ratings

The price target for Commercial Metals Company (NYSE: CMC) is at $16. Metals spreads in rebar and MBQ are weakening, while US non-residential construction trends remain mixed, the analyst said.

The price target for Nucor Corporation (NYSE: NUE) is at $42. Although the company’s sheet exposure is merely 40 percent of volume, it is well positioned for robust growth in mid-2016, Woodworth mentioned. He added, however, that plate markets remained very weak and there was significant import pressure in rebar and MBQ.

Underperform Rating

The price target for AK Steel Holding Corporation (NYSE: AKS) is at $2. “AK Steel’s high fixed cost base, slab short position, and Ashland outage are major headwinds” and the company is expected to burn cash at rate of $43mm in 2016 and $109mm in 2017, Woodworth commented.

Latest Ratings for STLD

DateFirmActionFromTo
Apr 2021B of A SecuritiesUpgradesNeutralBuy
Apr 2021Credit SuisseMaintainsOutperform
Apr 2021Goldman SachsInitiates Coverage OnBuy

View More Analyst Ratings for STLD
View the Latest Analyst Ratings

 

Related Articles (STLD + X)

View Comments and Join the Discussion!

Posted-In: Credit SuisseAnalyst Color Long Ideas Short Ideas Initiation Top Stories Analyst Ratings Trading Ideas Best of Benzinga

Latest Ratings

StockFirmActionPT
ICADGuggenheimInitiates Coverage On24.0
SMBKRaymond JamesUpgrades27.0
WNSNeedhamMaintains88.0
EFXNeedhamMaintains260.0
GOOGLJefferiesMaintains2,700.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com