KeyBanc Upgrades Schnitzer Steel (SCHN) to Overweight

KeyBanc upgraded Schnitzer Steel (NASDAQ: SCHN) from Sector Weight to Overweight with a price target of $25.00. Analyst Philip Gibbs said scrap industry headwinds were stabilizing and he noted compelling valuation.

"Our view reflects: 1) potential bottoming in U.S. scrap industry fundamentals, including company- and industry-specific restructuring; 2) meaningfully above-Street estimates for FY16-FY17; and 3) attractive valuation," said Gibbs.

"In early April, SCHN announced a strong cost-savings initiative of $60M annualized ($1.45/sh.). Recent analysis suggests a broader based U.S. metals recycling industry rationalization. We believe this could potentially allay feedstock/input costs for recyclers as competition for material eases. Contacts indicate U.S. scrap export demand is improving strongly in C2Q15 on buoyant Turkish buying despite elevated levels of finished Chinese steel exports. Cheap iron ore/Chinese steel overproduction threatens SCHN's long-term model, though stabilizing commodity prices, improving European macro and a weaker U.S. dollar should help in the short term. SCHN may also pursue international and/or domestic alliances to protect its long-term flank, strong FCFE generation abilities," added the analyst.

For an analyst ratings summary and ratings history on Schnitzer Steel click here. For more ratings news on Schnitzer Steel click here.

Shares of Schnitzer Steel closed at $17.54 yesterday.

You May Also Be Interested In

• Citi Downgrades UBS AG (UBSG:SW) (UBS) to Neutral
• JPMorgan Upgrades Assai Atacadista (ASAI) to Overweight
• Wells Fargo Upgrades Datadog (DDOG) to Overweight