KeyBanc Reiterates 'Buy'/Raises Estimates on Steel Dynamics (STLD)
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KeyBanc reiterates their Buy rating on Steel Dynamics (NASDAQ: STLD) with a $50 price target.
The firm raises their 2008 EPS estimate from $3.70 to $3.90. KeyBanc also raises their 3Q08 EPS estimate from $1.07 to $1.15, which reflects the upper end of the company’s guidance range of $1.05-$1.15. Their 2009 EPS estimate remains at $4.25.
The firm said, "We reiterate our BUY rating on the stock in light of the Company's excellent 2Q results, solid 2H outlook and greater than expected contributions from its recent acquisition of OmniSource. Our $50 price target represents about 7.0x EV/EBITDA based on our 2008 estimate, within a normalized historical range of 6-9x. The stock is currently trading at an EV/EBITDA multiple of about 5.0x our 2009 estimate, below the low end of a normalized historical range of 6-9x."
KeyBanc expects a positive market reaction to the company’s enhanced guidance of $3.80-$3.90, which is above the recent consensus of $3.46. In addition, the firm believes that "STLD shares remain meaningfully undervalued against underlying earnings power supported by industry leading operational execution, successful integration of internal and M&A growth initiatives, and an enhanced near-term profit outlook."
Steel Dynamics, Inc. is a steel producer. The Company, with its acquisition of OmniSource Corporation (OmniSource), is a scrap processor in the United States.
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