AK Steel: First-Lien Bonds At 80 And Unsecured Bonds At 35 May Rise Sharply
Swaraj Chowdhury, CFA
Swaraj Chowdhury, CFA
AK Steel: Unsecured Notes At 65 And Stock At $3 Are Attractive For Aggressive Investors
Swaraj Chowdhury, CFA • 10 Comments
Swaraj Chowdhury, CFA • 10 Comments
The Long Case For AK Steel Holding Corp.
Investment Capitalist • 22 Comments
Investment Capitalist • 22 Comments
Tue, May 17, 5:43 PM
- May has been rough for stocks of steel companies, but Cowen analysts say investors should be cautious before buying the dip.
- The firm thinks the spike in prices for Chinese hot rolled coil and iron ore will not last long, and that ongoing efforts to contain the HRC dumping experienced since 2014 may have little impact in the U.S. should the Chinese ship products to another country, which then in turn displaces product to the U.S., resulting in increased supply driving prices lower.
- The firm rates U.S. Steel (NYSE:X), AK Steel (NYSE:AKS), Nucor (NYSE:NUE) and ArcelorMittal (NYSE:MT) at Market Perform, with Steel Dynamics (NASDAQ:STLD) and Reliance Steel (NYSE:RS) at Outperform.
- Separately, the U.S. today set final anti-dumping duties of 265.79% on imports of cold-rolled flat steel from China and 71.35% on imports from Japan.
Thu, May 12, 5:17 PM
- U.S. Steel (NYSE:X) tumbled 10.4% and AK Steel (NYSE:AKS) sank 5.4% in today's trade as analysts say more attractive prices for U.S. steel and falling Chinese prices likely will raise the appeal of targeting the U.S. market even after import tariffs were introduced in recent months for some products.
- "A boat load of imports are likely on the way,” says Axiom Capital's Gordon Johnson as he reiterates a Sell rating $5 year-end stock price target for U.S. Steel.
- U.S. Steel has jumped 85% YTD for its best year in more than a decade, but investors now are spooked by fears that steel prices will follow falling prices for raw materials such as iron ore, says BMO Capital analyst David Gagliano.
- Also today: MT -4%, NUE -0.3%, RS -0.3%, STLD -1.4%, TX -0.4%, WOR -0.5%, GGB -4.3%, CLF -6.9%.
Fri, Apr. 29, 5:35 PM
Fri, Apr. 29, 9:12 AM
- Gainers: PRGN +75%. GNW +16%. P +13%. AMZN +12%. SDRL +11%. EXPE +11%. MNST +11%. ROVI +10%. SNMX +9%. LNKD +7%. CRC +7%. DNR+7%. DRYS +7%. TIVO +6%. LGCY +6%. SHPG +5%. GPL +5%.
- Losers: BIOC -22%. GLNG -17%. EPAY -17%. MOH -15%. SRCL -15%. IMGN -14%. SYNA -11%. AKS -8%. HCLP -8%. ALR -6%. GILD -6%. RXDX -6%.
Thu, Apr. 28, 4:09 PM
- AK Steel (NYSE:AKS) -6.2% AH after announcing a public offering of 52M common shares, with an underwriters option to purchase up to an additional 7.8M shares.
- AKS says it plans to use the proceeds to repay outstanding borrowings under its $1.5B revolving credit facility.
- Now read AK Steel: Should you remain invested after 110% gains?
Tue, Apr. 26, 3:46 PM
- AK Steel (AKS +4.2%) pushes toward highs of the day following its narrower than expected Q1 loss that also was much smaller than the loss from the year-earlier quarter.
- AKS says Q1 shipments fell 5% Y/Y to 1.65M vs. 1.75M tons a year ago, mostly due to the company's strategic decision to reduce exposure to commodity products; average selling prices fell to $914/ton from $999 a year earlier and $929 in Q4 2015.
- Q1 shipments of hot rolled carbon steel products fell 34%, partly offset by a 7% increase in shipments of higher value coated products that are sold mostly to the automotive market.
- AKS also says its Q1 adjusted EBITDA jumped 41% Y/Y to $81.1M, principally due to a better product mix, operational improvements, a continuous focus on reducing costs, and lower raw material and energy costs.
- Now read AK Steel: Should you remain invested after 110% gains
Tue, Apr. 26, 8:34 AM
Mon, Apr. 25, 5:30 PM
- ABG, ABX, AHGP, AIXG, AKS, ALLY, ARLP, ATI, AVX, AXE, BAX, BEAV, BLMN, BP, CNC, CNX, COH, CPLA, CRS, CTG, CYNO, DD, DFRG, DTE, ENTG, ETR, FBC, FCAU, FCH, FCX, FLIR, FLWS, FMER, GLPI, GLW, GPK, HSY, HUBB, HZO, ICLR, IIVI, IR, JBLU, JNS, LLY, LMT, LPT, MAS, MDXG, MHFI, MMM, NCI, ODP, PAG, PCAR, PCH, PG, PH, PNR, POL, R, RAI, SAH, SAVE, SCL, SIR, SPG, ST, SUI, SVU, TEN, TMUS, TRI, TROW, WAB, WAT, WDR, WHR, WYN
Tue, Apr. 19, 3:39 PM
- Analysts at both Barclays and BofA Merrill Lynch raise their price targets for some steel industry stocks (SLX +4%), seeing industrial activity picking up for this spring and tight domestic supplies and low imports supporting higher steel prices.
- But the firm still expect pricing to come down over H2 as overseas production ramps back up and domestic scrap flows improve.
- Barclays says US Steel (X +4%) and AK Steel (AKS +4.5%) still look expensive but the stocks should benefit in the near term from the momentum driving hot rolled coil pricing; the firm raises its price targets for X to $15 from $7, AKS to $3 from $2, Steel Dynamics (STLD +1.5%) to $27 from $22, and Nucor (NUE +0.9%) to $52 from $47.
- BofA Merrill raises its stock targets for X to $9 from $1, AKS to $2.50 from $1, STLD to $27 from $24, and NUE to $55 from $50.
- However, BofA also downgrades Reliance Steel (RS -0.2%) to Underperform from Neutral, thinking the stock’s strong move has taken its valuation well above its historical EBITDA averages.
- Now read Reuters: China, major producers fail to reach steel deal
Mon, Apr. 18, 5:38 PM
- China and other major steel-producing countries have failed to reach a deal to tackle global steel overcapacity, as the sides argued over the causes and whether China is keeping loss-making producers afloat, Reuters reports.
- China's assistant commerce minister denied that his country subsidizes steel exporters, saying China had cut 90M metric tons of capacity and had plans to reduce it by another 100M-150M, while critics say it would still have a capacity of ~1B metric tons, far in excess of its needs.
- Relevant tickers: SLX, X, AKS, NUE, STLD, MT
- Now read China to scrap some export subsidies, U.S. Trade Rep says
Thu, Apr. 14, 5:32 PM
- China has agreed to scrap $1B in export subsidies on a range of products from metals to agriculture and textiles, according to the U.S. Trade Representative, but some industry executives are skeptical about the deal's impact.
- Reuters reports one source says the agreement is not comprehensive enough to do much to help the U.S. steel industry, given its focus is only on specialty steel products.
- U.S. Steel (NYSE:X) President/CEO Mario Longhi is cautious about China's move: "China has been saying a lot of things for the past couple of decades... We need to see the proof in actions, not just in verbiage."
- Wall Street mostly ignored the agreement, with stocks in related sectors showing a mixed bag in today's trade: AA +2.3%, AKS +1.3%, NUE +0.4%, STLD +0.3%, X -0.8%, FCX -0.8%.
- Now read AK Steel, U.S. Steel downgraded to Sell at UBS
Fri, Apr. 8, 8:21 AM
- AK Steel (NYSE:AKS) -2.2% premarket and U.S. Steel (NYSE:X) -1.3% after shares are downgraded to Sell from Neutral at UBS.
- The firm is concerned about "balance sheet deterioration over time" at AKS, which needs to manage its high cost base and track record of “sustained ongoing cash burn."
- UBS sees "a decent likelihood" that AKS could roll its 2018 secured notes, but without a more meaningful escalation of free cash flow, it also sees a possibility that more meaningful liquidity issues could be encountered in 2019.
- UBS says U.S. Steel is unlikely to generate sustainable free cash flow given its steel price forecast, saying that while cost controls and reductions in working capital have helped X’s cash flow position, the improvements would diminish over time, leaving the company in a “long-term cash burn position.”
- Now read Major steel players set for better 2017, J.P. Morgan says
Tue, Apr. 5, 11:36 AM
- Higher steel prices have set the stage for improved performances by the major players in the steel industry, J.P. Morgan analyst Michael Gambardell says as he maintains Overweight ratings for U.S. Steel (X +3.1%), AK Steel (AKS +2.4%), Nucor (NUE +0.6%) and Steel Dynamics (STLD +0.7%).
- Gambardell hikes his price target for U.S. Steel to $28 from $17, as domestic steel sheet prices should be supported by U.S. supply cuts in the form of reduced imports from positive sheet trade case rulings as well as domestic capacity curtailments.
- In raising his price target on NUE to $55 from $43, Gambardell believes mini-mills such as NUE will continue to enjoy margin expansion, with steel prices increasing faster than scrap prices.
- Now read Credit Suisse, Deutsche Bank disagree on near-term steel outlook
Wed, Mar. 23, 6:48 PM
- Credit Suisse and Deutsche Bank take divergent views on the outlook for global steel prices (NYSEARCA:SLX), with the former expecting prices to rise further over the next few months and the latter predicting that the upward trend probably will not continue.
- Credit Suisse analyst Curt Woodworth sees U.S. steel prices likely continuing to rise through the end of Q2, citing growing demand and other factors including reduced Asian production and U.S. trade restrictions, which should keep a lid on U.S. steel imports.
- Woodworth names U.S. Steel (NYSE:X) and Steel Dynamics (NASDAQ:STLD) as his top picks in the group, as they have the highest leverage to flat rolled steel, which should be helped in 2016 by much higher volumes and continued import restrictions; he raises his stock prices targets for X, STLD and AK Steel (NYSE:AKS) to a respective $22, $27 and $3.50 from $19, $25 and $2.
- However, Deutsche Bank's Jorge Berstain believes the YTD rally in commodity prices will not continue, and cuts his 2016 iron ore price outlook by 4% to $44/ton; he downgrades Nucor (NYSE:NUE) and Reliance Steel (NYSE:RS) to Hold from Buy, and maintains Sell ratings on X and AKS.
- Earlier: Deutsche Bank sees commodity rally fizzling; downgrades ABX, HL, PAAS, CDE
Mon, Mar. 21, 9:54 AM
- U.S. Steel (X -3.3%) is downgraded to Underperform from Hold with a $10 price target at Jefferies, which says recent gains have been driven by seasonal restocking and gradual demand recovery, but the firm fears momentum may subside into summer.
- Jefferies says U.S. Steel's recent rally is particularly difficult to justify, with shares now trading at 19.3x 2016 and 8.9x 2017 EV/EBITDA vs. the 5.1x historic average; for leverage to near-term price momentum, the firm prefers AK Steel (AKS +1.6%) and would take profits in X.
- Jefferies also downgrades Reliance Steel (RS -1.2%), Commercial Metals (CMC -4.1%) and Olympic Steel (ZEUS -2.3%) to Hold from Buy; the firm's top picks in the space are Steel Dynamics (STLD +0.5%) and Nucor (NUE -0.6%).
Wed, Mar. 16, 2:19 PM
- The U.S. Commerce Department says it will impose anti-dumping duties on certain hot-rolled steel products from seven countries, according to a preliminary ruling.
- AK Steel (AKS +3.1%), ArcelorMittal (MT +0.8%), Nucor (NUE -0.6%), U.S. Steel (X +1.7%), Steel Dynamics (STLD +1.3%) and SSAB Enterprises complained last August that the imported steel goods were being sold too cheaply or benefited from unfair government subsidies.
- The countries affected by the ruling are Australia, Brazil, Japan, Korea, the Netherlands, Turkey and the U.K.
AK Steel Holding Corp. is an integrated producer of flat-rolled carbon, stainless and electrical steels and tubular products through its wholly-owned subsidiary, AK Steel Corp. The company's operations consist primarily of nine steelmaking and finishing plants and tubular production facilities... More
Sector: Basic Materials
Industry: Steel & Iron
Country: United States
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