AK Steel +5% as BofA upgrades to Buy

AK Steel (AKS+5.1% premarket after BofA/Merrill upgrades shares to Buy from Neutral with a $10 price target, up from $9, citing better global electrical steel demand, falling iron ore costs which should start to benefit AKS in Q3, and an improving free cash flow story into 2015.

The firm says AKS is the only beneficiary of lower iron ore prices in its coverage universe, as AKS still relies on third party iron ore for half its needs even with the Magnetation investment.

AK operations should be back to normal by Q3 with the return of its Ashland, Ky., furnace in late Q1 and after playing catchup with customers, BofA ads.

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