Barclays on North America Metals & Mining: Steels: Lowering Estimates & Target Prices on Lower Steel Prices

June 12, 2012 4:42 PM EDT Send to a Friend
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Barclays on North America Metals & Mining: Steels: Lowering Estimates & Target Prices on Lower Steel Prices

Analyst, David Gagliano, said, "Ahead of what will likely be difficult mid-quarter updates for the US steel producers, we are lowering our estimates due to weaker prices thus far in Q2, and our view that the soft market conditions will continue in Q3...We are lowering our representative HRC spot price for 2012 from $689/t to $640/t. As a result of lower pricing assumptions, we are lowering our 2012 EBITDA estimates by an average of ~18%. We are lowering our target prices for each of the US steel producers by an average of ~25%."

All in, Gagliano sees the steel investment cycle getting closer to trough level, however, at this point, it's too early to buy.

Barclays maintains an Overweight rating AK Steel (NYSE: AKS), but lowers price target from $11 to $7, cut FY12 EPS estimate from $0.63 to -0.03, but maintains FY13 Estimate at $1.20.

Maintains an Equalweight on Nucor (NYSE: NUE), cuts PT from $44 to $38, cuts FY12 EPS estimate from $2.18 to $1.84, maintains FY13 at $3.50.

Equalweight rating Steel Dynamics (Nasdaq: STLD), price target lowered from $15 to $12, FY12 EPS estimate cut from $1.30 to $1.00.

Equalweight rating U.S. Steel (NYSE: X), PT cut from $32 to $22, FY12 EPS estimate from $2.45 to $1.45.


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