Citi downgraded Steel Dynamics (STLD) to Neutral from Buy. The analyst is structurally bullish on steel but sees short-term headwinds. Sheet markets appear inflated by temporary re-stocking demand with prices well above import parity, the analyst tells investors in a research note. Citi dies not expect an imminent correction with lead-times still expanding but says "caution is warranted." The firm cites valuation, with Steel Dynamics shares up 63% in the past week, and earnings risk around joist and deck for the downgrade. It currently prefers Nucor (NUE) to Steel Dynamics given its less exposure to joist and deck earnings.
Published first on TheFly
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