US Steel Sector downgraded to Neutral at Goldman Sachs
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From Notable Calls:
Goldman Sachs is downgrading their view on US Steel Sector to Neutral from Attractive this morning:
They are transferring coverage of the steel sector to Sal Tharani from Aldo Mazzaferro. Firm is also downgrading their coverage view for the sector to Neutral from Attractive due to the re-emergence of various risks-both perceived and real, such as rising dollar, "China fear", weak economic data out of the developed and emerging markets, and softness in steel and scrap prices. They believe that negative news flow in the near term would keep multiples compressed, and wait for a better opportunity to get more constructive on the sector.
Nucor (NYSE: NUE) and US Steel (NYSE: X) remain Buy rated stocks. However, they are removing US Steel from Conviction Buy List and also upgrading STLD (Nasdaq: STLD) to Buy, replacing CMC (NYSE: CMC), which is now rated Neutral. In the near term, the firm see smore upside in mini-mills due to a sharper drop in scrap prices than steel, which should expand their metal margins. Worthington and Gibraltar remain Sell rated stocks.
A sharp correction in steel equities, primarily driven by the macro concerns and decline in oil prices, has created selective investment opportunities. Valuations of some of these stocks reflect a doomsday scenario, which the firm believes is not what longer-term fundamentals suggest.
Goldman has lowered their steel price estimates by an average of 6% for 2H-2008 and 2009. Earnings estimates are now 1% and 7% lower than earlier estimates for 2008 and 2009, respectively. The biggest change they have made is in multiples which they are lowering to reflect near-term risk aversion by investors. Firm's target prices have been cut by an average of 18% across coverage universe.
Notablecalls: This looks like bottoming action to me. The bids wanted situation we saw yesterday will reverse itself as I feel the shorts have gotten somewhat ahead of themselves.
For more calls go to http://notablecalls.blogspot.com/
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Goldman sachs
dr bob on Oct 9, 2008 12:41 PMThese guys seem to be pretty lousy analysts. First, they recommend selling gold about a month ago...not long before gold has it's largest one-day gain EVER. I think they were the same guys that were predicting $200 oil (and now oil is at about $87). Nice call, Goldman. Now, today, GS downgrades X...and lowers its price target from 182 to 56! They go from buy to neutral.Think about this a minute: one month ago they were still recommending to buy X...then, after the stock declines by about 60%, they change to "neutral" (as in, "I have no idea what the stock price should be now...or will be in the future"). Yeah thanks for the advice, Goldman. I wouldn't be surprised to see GS change their rating of X to SELL a month from now...after the stock declines another 20% or so. These guys are clowns...it's no wonder that GS stock is at 100 right now. I'll think about buying GS when it gets to 50. Maybe by then, they'll have fired their current equity analysts and hired some that might actually communicate once in a while with the companies that they cover. It seems to me that their current batch of analysts are incompetent hacks...if you take their advice, you're sure to lose a lot of money. Then again, maybe they're simply trying to manipulate stock prices so that they can make money in their own accounts (at the expense of the average investor, of course).That might help get their earnings up...