Steel manufacturer Nucor Corporation (NYSE: NUE) recently revealed that it will be opening a new mill in Mason County, West Virginia. The mill is likely to take two years to build.
Following the news, shares of the company jumped more than 3.5% to close at $115.14 in Wednesday’s extended trading session.
The mill, which will have a capacity to produce three million tons of steel annually, will cost the company roughly $2.7 billion to build. Notably, the mill’s location along the Ohio River is also expected to give a logistical advantage to the company.
The new mill will be capable of producing 84-inch sheet products. It will also include a 76-inch tandem cold mill and two galvanizing lines.
The CEO of Nucor, Leon Topalian, said, “Our new sheet mill in Mason County will have unmatched capabilities that will enable the continued expansion of high-quality, low carbon steels, building on our industry-leading offerings. We are pleased to create hundreds of new, high-paying jobs, and position West Virginia as a leader in clean steel production. We are also excited to create substantial long-term value for investors through this high-return investment, which will help drive Nucor’s continued growth.”
Recently, Wolfe Research analyst Timna Tanners downgraded the stock to Sell from Hold with a price target of $102, which implies downside potential of 11.1%.
According to the analyst, the macro prospects of steel face a considerable number of headwinds, which may hurt the company.
Wall Street’s Top Analysts have awarded Nucor a Hold consensus rating based on 4 Holds and 1 Sell. The average Nucor price target of $107.40 implies downside potential of 6.4% from current levels. Shares have gained 102.3% over the past year.
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