Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

BMO Sees Limited Near-Term Upside For Steel Dynamics

Courtesy of Benzinga

BMO Sees Limited Near-Term Upside For Steel Dynamics

While Steel Dynamics, Inc. (NASDAQ: STLD) has good long-term prospects, there are limited company-specific catalysts that could lend meaningful upside to shares in the near term, according to BMO Capital Markets.

The Analyst

BMO’s David Gagliano downgraded Steel Dynamics from Outperform to Market Perform while lowering the price target from $40 to $30.

The Thesis

Steel Dynamics’ long-term growth prospects seem underappreciated, especially after the company announced plans to construct a greenfield flat-rolled mill in Texas, Gagliano said in the downgrade note.

He added, however, that between 2019 and 2022, Steel Dynamics has higher exposure to near-term spot steel pricing volatility.

The analyst cited two reasons for this. First, the company’s free cash flow buffer is currently lower than it has been historically, given the planned increase in capital expenditure during 2020-2022. And second, Steel Dynamics has much higher-than-peers near-term EBITDA sensitivity to changes in underlying spot sheet prices.

Although Steel Dynamics could generate healthy volume growth in the longer term, there is more downside risk than upside potential to underlying spot prices till the end of 2019, Gagliano said.

Price Action

Shares of Steel Dynamics had declined more than 1.46% to $27.65 at the time of publishing.

Related Links

Benzinga’s Top Upgrades, Downgrades For September 6, 2019

10 Biggest Price Target Changes For Friday

Latest Ratings for STLD

Date Firm Action From To
Sep 2019 Downgrades Outperform Market Perform
Aug 2019 Downgrades Buy Neutral
Jul 2019 Maintains Outperform

View More Analyst Ratings for STLD


View the Latest Analyst Ratings

Posted-In: BMO Capital Markets DAvid GaglianoAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!





You must be logged in to make a comment.
You can sign up for a membership or get a FREE Daily News membership or log in

Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!