The shifting moods of analysts, as supported by a skein of facts about the current economic condition, shape stocks as we know them. Today, steel stocks were the ones on the block, as U.S. Steel (NYSE:X), Steel Dynamics (NASDAQ:STLD), and Nucor (NYSE:NUE) all trended downward after analyst comments.
Both U.S. Steel and Steel Dynamics suffered downgrades at BNP Paribas Exane, via analyst Tristan Gresser. Both dropped from “outperform” to “neutral.” Meanwhile, the opposite happened to Nucor, which saw it go from “neutral” to “outperform.” U.S. Steel, BNP Paribas Exane noted, is doing nicely on its work toward an EAF transition, but much of the gains it could realize are basically priced in. That reduces the reward and slightly increases the risk. Meanwhile, demand is declining in Europe while flat-rolled steel issues persist. Much the same happened to Steel Dynamics.
Nucor, however, is on track for some exciting new developments. Just last week, it purchased two new chunks of land in West Virginia to build a transloading and processing operation. Said parcels are currently undergoing environmental analysis, but the deal has closed. Further, it’s also seeing strong demand and good growth potential thanks to its connections to non-residential construction. That allows it access to federally funded projects, which gives it a resilient market to play into.
All three steel stocks, however, are considered a Hold by analyst consensus. While Nucor saw the lowest drop today, analysts expect the least from it. Its average price target of $159 per share means it comes with 1.18% downside risk. However, U.S. Steel, with a $38.13 average price target, comes with a 57.95% upside potential.
