Berenberg Downgrades Steel Dynamics (STLD) to Hold; Tactical Shift Following Stock Surge
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Berenberg downgraded Steel Dynamics (NASDAQ: STLD) from Buy to Hold with a price target of $36.50 on on tactical grounds after the large share rally.
Analyst Alessandro Abate commented, "After a huge year-to-date rally (c75%), we downgrade to Hold, despite the boost to our 2017E EBITDA, now at $1.35bn (+5.3%) and the still decent, but more moderate, upside (c15%) to our price target of $36.50 (from $35). While we maintain our positive view of the stock, we see an increasingly higher risk of profit taking, as we believe that a large dose of optimism related to a potential boost to US infrastructure spending and protectionist measures seems to have already largely been priced in. Steel Dynamics remains an exception in our coverage universe, in terms of business model (strong FCF and higher returns for shareholders) and management style (great strategic and operational skills translating into support to value and growth), but the steep rally after the US election calls for a breather, in our view."
Shares of Steel Dynamics closed at $32.28 yesterday.
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