Citi downgraded Reliance, Inc. to Neutral from Buy with a $380 price target. The analyst continues to see Reliance as a “very strong operator with positive structural trends.” While its EBITDA per ton is now double what the steel mills are generating, a “remarkable testament to the value” of the last mile in steel, Citi is cautious to keep hiking its forecast with gross margins stabilizing at 30%-32% recently, the analyst tells investors in a research note. The firm believes stock is fairly valued at a $20B market capitalization versus $1B of sustainable free cash flow generation. Reliance’s return on invested capital still slightly lags Nucor (NUE) and Steel Dynamics (STLD) and does not appear to justify a premium, Citi contends.
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- Reliance, Inc. price target raised to $355 from $295 at BMO Capital
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