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Bank Of America Sours On Steel

Bank Of America Sours On Steel - Kaiser Aluminum Corporation NASDAQ:KALU, Nucor Corporation NYSE:NUE

Bank of America Merrill Lynch has downgraded steel stocks such as Nucor Corporation NUE and Steel Dynamics, Inc. STLD on softer steel prices.

Analyst Timna Tanners has cut the rating of Nucor shares to Neutral from Buy on the steel price outlook, cautious long product views and valuation. However, Tanners maintains a $56 price objective on Nucor shares.

Related Link: "As Good As It Gets" In Nucor, Bank Of America Says; Downgrades To Neutral

Tanners also downgraded Steel Dynamics to Neutral from Buy after a strong rise in share prices on the view that steel prices have run out of steam. The analyst also cut the price target on the stock by $1 to $28.

"Q2 results were a beat, but the outlook was softer than expected and we lowered estimates and see consensus at risk. We continue to like STLD on a relative basis, but expect discounted import tons to pressure sheet steel markets into Q4," Tanners wrote in a note.

Tanners slashed 2016 EPS forecast to $1.90 from $2.00, compared with consensus of $2.13, and third-quarter EPS view fell to $0.57 from $0.66 versus consensus at $0.72.

Aluminum Outlook Likewise Murky

Meanwhile, analyst PT Luther has downgraded Kaiser Aluminum Corp. KALU to Neutral from Buy on cloudier aerospace outlook.

"We downgrade KALU to Neutral on our view that key aero and auto end markets are in the latter stages of prolonged upcycles," Luther noted.

The analyst, who also pointed to typically slower second half, cut 2017 EBITDA estimate to $207 million from $213 million. The analyst also lowered 2017–18 EPS estimates to $6.00/$6.40 from $6.20/$7.00.

Luther also trimmed price objective on Kaiser shares by $2 to $92.

At Time Of Writing...

  • Kaiser closed Wednesday trading down 3.64 percent at $85.57 and showed no trades in Thursday's pre-market.
  • Nucor closed Wednesday down 2.91 percent at $54.09.
  • Steel Dynamics closed down 1.45 percent at $26.46.

None of the three showed any trades in Thursday's pre-market.

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DateFirmActionFromTo
Jul 2016Bank of AmericaDowngradesBuyNeutral
May 2016Goldman SachsInitiates Coverage onNeutral
Mar 2016Credit SuisseInitiates Coverage onNeutral

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