Barclays Maintains an 'Overweight' on Ternium S.A. (TX); Still Struggling to Understand the Rationale
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Price: $55.45 +2.29%
Rating Summary:
10 Buy, 7 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
10 Buy, 7 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Barclays maintains an 'Overweight' on Ternium S.A. (NYSE: TX) price target of $24.00.
Barclays analyst says, "Even after TX and Usiminas' conference calls to explain the transaction, we still struggle to fully understand why TX paid such a high premium to gain exposure to the Brazilian steel market. While we acknowledge that entering the Brazilian market was an old objective of TX management, we consider the transaction's high premium as significantly NPV dilutive (we calculate a transaction IRR of only 6.3% vs. our cost of capital for TX at 13.5%). In summary, we would have preferred other alternatives for capital allocation and have reduced our level of confidence in management's ability to generate shareholder returns."
For an analyst ratings summary and ratings history on Ternium S.A. click here. For more ratings news on Ternium S.A. click here.
Shares of Ternium S.A. closed at $16.03 yesterday.
Barclays analyst says, "Even after TX and Usiminas' conference calls to explain the transaction, we still struggle to fully understand why TX paid such a high premium to gain exposure to the Brazilian steel market. While we acknowledge that entering the Brazilian market was an old objective of TX management, we consider the transaction's high premium as significantly NPV dilutive (we calculate a transaction IRR of only 6.3% vs. our cost of capital for TX at 13.5%). In summary, we would have preferred other alternatives for capital allocation and have reduced our level of confidence in management's ability to generate shareholder returns."
For an analyst ratings summary and ratings history on Ternium S.A. click here. For more ratings news on Ternium S.A. click here.
Shares of Ternium S.A. closed at $16.03 yesterday.
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