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Behind Analyst Ratings for AK Steel after 1Q16

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1Q16 earnings

The upward momentum in steel stocks in 2016 has taken many analysts by surprise. It was, therefore, crucial for steel companies like U.S. Steel (X) and AK Steel (AKS) to prove their mettle with their 1Q16 financial results. In this part of our series, we’ll explore if Wall Street analysts have changed their opinions about AK Steel after its 1Q16 earnings release.

Behind Analyst Ratings for AK Steel after 1Q16

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Rating changes after 1Q16 earnings

The graph above shows Wall Street analysts’ actions after AK Steel’s 1Q16 financial results. As you can see, there has been no major change in analyst recommendations after the 1Q16 earnings release. However, some brokerages have raised their target prices for AK Steel. Macquarie has raised AK Steel’s one-year target price to $5.5 from $4.8. Cowen has also raised AK Steel’s target price to $5 from $3 after the company’s 1Q16 earnings release.

Majority ratings

Out of the 17 analysts surveyed by Bloomberg, three have a “buy” or equivalent rating on AK Steel while four analysts rate the stock as a “sell.” The majority of analysts rate AK Steel as a hold after its 1Q16 earnings release.

At the beginning of the year, AK Steel’s consensus one-year price target represented the least upside as compared to other steelmakers like ArcelorMittal (MT) and Nucor (NUE). We noted that AK Steel could be an industry underdog. There were certain positives like automotive strength and AK Steel’s falling raw material costs that markets (IWO) (RZG) seemed to be ignoring then.

Continue to the next part for a closer look at how these factors have been playing out for AK Steel.

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