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Steel: Adjusting Ratings, Raising Price Targets and Revising Estimates Following Strong Survey Results

We rearranged the steel coverage group investment ratings to account for recent trading strength, the divergence between the closing prices and price targets, and higher earnings outlook(s). Today’s actions were triggered by the better-than-expected carbon steel survey results and review of future market drivers. Among the major changes, we upgraded Nucor (NUE) after considering the new earnings outlook and the rising potential for a stimulus trading boost. At the same time, we lowered STLD and RS to OUTPERFORM (versus Strong Buy) following the recent surge in trading. While still positive on these two names, we would be less aggressive. Finally, we referred to the surprising level of bullishness building throughout the channel and strong survey data points. The most interesting takeaway involved steel contacts raising their year-end HRC price forecast by $100-125/ton. Continue reading

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6:04 PM

Steel Dynamics (STLD): The Opposite of SteelMageddon – Raising Estimates and Target Price

What is the opposite of Steelmageddon? Whatever word just popped into your head is probably the best way to describe current domestic steel industry fundamentals. Following a closer look at the drivers behind the carbon flat rolled markets, and communicating with several channel contacts, we decided to increase our carbon sheet price forecasts and the estimates on STLD. Continue reading

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9:52 AM

Steel Dynamics (STLD): Sometimes Mixed Is Good – Upgrading The Shares To A Hold

We are upgrading the shares of Steel Dynamics (STLD) to a HOLD rating as the shares have surpassed our previously-issued twelve-month target price of $27, falling 16% since the early-June downgrade (to underperform). The aggressive trading reaction to carbon scrap price headlines released earlier in the week could be the “final shoe to drop” in the metals & mining space. Continue reading

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9:00 AM

Steel Dynamics (STLD): A Dynamics In The Rust? Starting Coverage With An OUTPERFORM

Steel Dynamics (STLD) looks interesting at the current price level. In a world where almost everything can be described as weak, distressed, hitting new lows, unprecedented, or uber-bearish, we point to one of the most frequently-overlooked industrial companies in North America, distinctly advantaged versus its peers and protected by its balance sheet, in our view. Today, we are initiating coverage on the shares of STLD with an OUTPERFORM recommendation and a twelve-month target price of $28/share, staying focused on the compelling risk-versus-reward profile, long-term market share opportunities, near-term pricing tailwinds, and projected CapEx ROIs. Continue reading

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9:00 AM
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