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AK Steel: After Q1 Outperformance, Analysts See Little Upside

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AK Steel

AK Steel (AKS) outperformed other US steel stocks in the first quarter. The stock underperformed the broader steel space last year and lost more than 60%.

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Analysts’ ratings

Looking at analysts’ estimates, AK Steel’s target price of $2.92 represents a potential upside of 6.2% over its closing prices yesterday. AK Steel has the lowest upside potential based on analysts’ target prices among the steel companies that we’re covering. Nucor (NUE) and Steel Dynamics (STLD) are trading 16.3% and 17.6%, respectively, below their mean consensus target prices. U.S. Steel Corporation’s (X) target price of $24.71 represents a potential upside of 26.8%—the highest among the steel stocks that we’re covering.

Nucor received a “buy” or higher recommendation from 73% of the analysts. For Steel Dynamics, 70% of the analysts recommended a “buy.” AK Steel received a “buy” or higher recommendation from 13% of the analysts—the lowest among the steel companies that we’re discussing. U.S. Steel Corporation received a “buy” or higher recommendations from 29% of the analysts polled by Thomson Reuters on April 1.

Outlook

US steel prices are holding their ground amid firm global steel prices. China’s slowdown concerns have also eased. China is going slow on deleveraging and providing stimulus to support its economy. The US-China trade talks also seem to be heading in the right direction, which should boost the commodity market sentiments. In the US markets, the Fed’s dovish stance should support the steel demand. US steel stocks might continue their good run due to the argument mentioned above.

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