Berenberg Upgrades Nucor (NUE) to Buy; Sees Good Entry Point
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Berenberg upgraded Nucor (NYSE: NUE) from Hold to Buy with a price target of $57, saying they see a good entry point on valuation and as steel prices rise.
Analyst Alessandro Abate commented, " We upgrade Nucor to Buy from Hold on valuation grounds, driven by our higher US hot-rolled flat steel (HRC) price estimates ($525/st from $515/st) reflected in our 2017E EBITDA and EPS at $2.5bn (+4%) and $2.94 (+6.2%). Our 2017E price target drops to $57.00 from $57.50 on higher 2017E net debt. After a sharp Q3 correction, US steel price momentum has increased by $30/st since late October. This happened due to currently low US steel industry utilisation rates (66.4%), declining imports (September data show 10% mom declines, 3.2% yoy) and lower inventory into the year-end just as US scrap prices are set to rebound in the next couple of weeks, in our view. This will underpin apparent demand recovery into Q1 2017 and support Nucor’s share price re-rating."
Shares of Nucor closed at $47.83 yesterday.
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