Following the pressure on shares of North America steel companies due to weakening fundamentals, they are now more attractively valued.
North American steel equities are now better positioned, with a potential improvement in the rate environment ahead and a stable post-election backdrop in 2025, according to JPMorgan.
Analyst Bill Peterson upgraded the ratings for:
- Nucor Corp (NYSE:NUE) from Neutral to Overweight, while raising the price target from $170 to $174.
- Steel Dynamics Inc (NASDAQ:STLD) from Underweight to Neutral, while lifting the price target from $120 to $131.
- United States Steel Corporation (NYSE:X) from Neutral to Overweight, while raising the price target from $40 to $42.
Check out other analyst stock ratings.
Nucor, Steel Dynamics and US Steel are likely to provide "timid outlook comments" next week, due to "lower lagged-contract pricing and hand-to-mouth buying more than offsetting easing scrap costs," Peterson said in a note.
Uncertainties related to Fed rates and election results are likely to be "a key overhang" on demand in the back half of the year, "likely resulting in further de-risking of consensus estimates," the analyst wrote.
Nucor and United States Steel are the best positioned for upside going into next year, according to Peterson. While both Nucor and Steel Dynamics have "strong product diversification," Peterson noted that the recent pullback in United States Steel's stock offers "an attractive buying opportunity on standalone valuation support."
Price action at the time of publication Monday:
- Nucor's shares had climbed by 2.95% to $142.89
- Shares of Steel Dynamics had risen by 1.22% to $112.35
- United States Steel's stock had jumped by 4.00% to $32.52
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