KeyBanc Cuts AK Steel (AKS), U.S. Steel (X), and Olympic Steel (ZEUS) to Underweight; Steel Dynamics (STLD) Lowered to Sector Weight
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KeyBanc downgraded AK Steel (NYSE: AKS), U.S. Steel (NYSE: X), and Olympic Steel (NASDAQ: ZEUS) from Sector Weight to Underweight with price targets of $4, $18, and $21, respectively. Steel Dynamics (NASDAQ: STLD) was downgraded to Sector Weight from Overweight and its price target was removed.
Analyst Philip Gibbs said he sees increasing risks in the U.S. sheet market.
The analyst explained, "Following our 3Q “Sheet on the Street” Survey and market analysis, we are incrementally cautious on U.S. carbon sheet market prospects given further slowing in demand momentum and added 4Q supply risks, including stronger imports and a second new potential U.S. HRC producer. A weakened prospective supply-demand balance should place further pressure on already sliding U.S. carbon sheet prices and supports our view of a more competitive backdrop in '17 (with added risks). We now believe '17 will represent peak U.S. carbon sheet cyclical demand, supporting HRC pricing below average '16 levels. U.S. carbon sheet-intensive equities should experience forward multiple compression vs. current realities."
Shares of AK Steel closed at $5.17 yesterday.
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