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Analysts Turned Bearish on AK Steel after Its 3Q17 Earnings

Mohit Oberoi, CFA - Author

Aug. 18 2020, Updated 5:35 a.m. ET

AK Steel’s earnings

AK Steel (AKS) released its 3Q17 earnings on October 31. The company reported revenues of $1.49 billion for 3Q17—compared to $1.56 billion in 2Q17 and $1.45 billion in 3Q16. AK Steel’s adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) fell sharply to $69.2 million in 3Q17—compared to $142 million in 2Q17 and $157 million in 3Q16. AK Steel missed the consensus estimates for its top line and bottom line in 3Q17. In this part, we’ll see how analysts are rating the stock after its 3Q17 earnings miss.

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According to the consensus estimates compiled by Thomson Reuters, AK Steel has a mean one-year target price of $5.61, which represents 33.3% upside over its closing price on November 8. In contrast, AK Steel carried a one-year target price of $7.68 on October 30—one day before its earnings release. AK Steel received a “strong buy” rating from two analysts, while two analysts rated the stock as a “buy.” The remaining nine analysts polled by Thomson Reuters on November 8 rated the stock as a “hold.”

Target price updates

Several analysts cut AK Steel’s target price after its 3Q17 earnings miss. BMO lowered AK Steel’s target price from $7 to $5, while JPMorgan Chase cut its target price from $8 to $6. JPMorgan Chase also lowered Nucor’s (NUE) target price, as we noted in the previous part. Clarksons Platou Securities downgraded AK Steel from “buy” to “neutral.” Citi lowered AK Steel’s target price from $7 to $5, while Jefferies cut its target price from $9 to $5.25.

Along with the 3Q17 earnings miss, the company’s guidance disappointed markets (XME) (MT). Read After 3Q17 Earnings Miss, AK Steel’s 4Q17 Guidance Spooks Markets for a broad overview of AK Steel’s guidance.

In the next part, we’ll see how analysts are rating U.S. Steel Corporation (X) after its 3Q17 earnings.


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