Goldman Sachs initiates a Sell rating and a six-month target price of $6 on Commercial Metals Company CMC as the company appear overvalued given leverage to weak non-residential construction.
Goldman Sachs notes, "While we prefer mini mills over their integrated counterparts, we believe CMC's high leverage to still very weak non-residential construction market and expensive valuation warrants a Sell rating. The company has relatively large exposure to the infrastructure (public) construction segment where we fear that budgetary concerns would restrain spending, and this was underscored by the company itself in its latest earnings conference call. We believe consensus estimates are high and expect them to come down."
CMC closed at $13.22 per share on Friday.
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