AK Steel

AK Steel (AKS) has fallen 17.8% in the second quarter and is now flat for the year. U.S. Steel (X) has also pared its 2019 gains and is negative for the year.

Analysts hold a somewhat bearish view of AK Steel.

Analysts Are Pessimistic about AK Steel despite the Recent Slump

AK Steel has received “buy” ratings from only two analysts, while ten have rated it as a “hold” or some equivalent. The remaining two analysts polled by Thomson Reuters on May 20 have rated it as a “sell.” AK Steel carries a mean consensus price target of $2.76, which represents a potential upside of 22.1% over its May 20 closing price.

Analyst action

In contrast, AK Steel had a target price of $2.86 on April 28, the day before its earnings release. After AK Steel’s first-quarter earnings release, Credit Suisse lowered its target price from $4 to $3.5, while Jefferies lowered its target price from $2.90 to $2.70. On May 8, UBS lowered AK Steel’s target price from $2.50 to $2.25. Last week, Cowen also lowered AK Steel’s target price by $0.10 to $2.50.

First-quarter earnings

AK Steel’s first-quarter earnings were better than expected. However, its earnings beat was largely due to certain one-time items. Furthermore, the company missed revenue estimates, and its shipment profile also looked weak. AK Steel is battling a slowdown in its core automotive end market. It’s lowered its 2019 earnings guidance and expects to post an adjusted EBITDA of $505 million–$525 million this year.

Earlier this year, AK Steel gave an EBITDA guidance of $515 million–$535 million for 2019. Read Are AK Steel’s Q1 Earnings Worth the Celebration? for a more detailed analysis of its first-quarter earnings results.

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