Goldman Sachs is upgrading AK Steel (NYSE:AKS) to Buy from Neutral and adding it to the
Americas Conviction Buy List. They recommend AKS for near-term to medium-term investors primarily due to its high sensitivity to steel prices. Its electrical steel segment should remain highly profitable and should get a boost from global stimulus packages, particularly in China. Firm's new 6- month P/E and EV/EBITDA based target price of $15 (increased from $9) implies the highest potential upside in their coverage of 34%. It should also benefit from lower iron ore prices next year.
Goldman notes they see steel prices at an inflection point
They remain positive on the steel sector in the near-term owing to impressive supply discipline exhibited by the industry around the world which has helped prices to bottom at a significantly higher level than other commodities. Firm estimates that HRC prices will bottom in January at $525 per ton, then increase to $625 by April before declining again. Scrap prices, which generally lead steel, are already on the rise.
Swapping Steel Dynamics for Nucor on Conviction Buy List
Given their expectations for a near-term increase in steel prices, the firm believes Steel Dynamics offers a higher potential reward than Nucor, which has historically been a defensive name that has not outperformed in steel market uptrends. They have therefore added Steel Dynamics to their Conviction Buy list in place of Nucor. However, they continue to rate Nucor as a Buy.
Notablecalls: AKS has a nice chart and with GSCO bumping it to a Conviction Buy the stock will fly. I see $12 in cards as soon as today.
Americas Conviction Buy List. They recommend AKS for near-term to medium-term investors primarily due to its high sensitivity to steel prices. Its electrical steel segment should remain highly profitable and should get a boost from global stimulus packages, particularly in China. Firm's new 6- month P/E and EV/EBITDA based target price of $15 (increased from $9) implies the highest potential upside in their coverage of 34%. It should also benefit from lower iron ore prices next year.
Goldman notes they see steel prices at an inflection point
They remain positive on the steel sector in the near-term owing to impressive supply discipline exhibited by the industry around the world which has helped prices to bottom at a significantly higher level than other commodities. Firm estimates that HRC prices will bottom in January at $525 per ton, then increase to $625 by April before declining again. Scrap prices, which generally lead steel, are already on the rise.
Swapping Steel Dynamics for Nucor on Conviction Buy List
Given their expectations for a near-term increase in steel prices, the firm believes Steel Dynamics offers a higher potential reward than Nucor, which has historically been a defensive name that has not outperformed in steel market uptrends. They have therefore added Steel Dynamics to their Conviction Buy list in place of Nucor. However, they continue to rate Nucor as a Buy.
Notablecalls: AKS has a nice chart and with GSCO bumping it to a Conviction Buy the stock will fly. I see $12 in cards as soon as today.
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