Goldman Revises Target on Ternium (TX) to $24 Following Lowered Steel Price Estimates

Goldman Sachs reduced its price target on shares of Ternium S.A. (NYSE: TX) from $27.50 to $24 Friday morning following lower steel price assumptions, an updated forex outlook, and "higher sovereign risk spreads to our discount rate." Goldman maintains a Buy rating on Ternium shares.

The firm said, "In our view, the company continues to offer the best risk/reward
balance vs. its steel peers on a combination of superior earnings quality and inexpensive valuation. In addition, TX is on the verge of updating its investment plans, which should ultimately dissipate growth concerns. Increasing political risk out of Argentina (following YPF nationalization), coupled with potential investment in low returns projects in Brazil (i.e.: Açu steel slab/pellet plant), have been the main overhangs to Ternium shares. We believe investors are overstating risks as we estimate TX’s Argentine business is trading at a P/BV of 0.1x, and that TX will only go ahead with a project in Brazil if it is able to secure a competitive supply of natural gas; TX can also bring in partners, reducing the potential dilution."

For an analyst ratings summary and ratings history on Ternium S.A. click here. For more ratings news on Ternium S.A. click here.

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