Stelco Holdings just upgraded at JPMorgan, here’s why

JPMorgan analyst Bill Peterson upgraded Stelco Holdings to Overweight from Neutral with a price target of C$52, up from C$45. Ahead of the mid-quarter guidance likely later this week from mini mills Nucor and Steel Dynamics, the firm expects Q4 outlook comments to reiterate trough earnings weighed down by lagged contract pricing. With lead times extended for most of the quarter and buyers focused on contract volumes, which benefit from 1-3 month lagged pricing, tailwinds from mill discipline and earlier than usual restocking activity should be largely realized in Q1 of 2024, says the firm. Stelco is its preferred pick in the current environment due to its leverage to spot pricing and industry-leading cost structure.