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| TITLE |
Steel marker Nucor rises after upgraded to 'Buy' |
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administrator |
DATE |
2008-09-11 08:48:56 |
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Steel marker Nucor rises after upgraded to 'Buy'updated
Sept. 10, 2008
NEW YORK - Shares of Nucor Corp. jumped 5 percent Wednesday as an analyst upgraded the steel manufacturer to "Buy" from "Hold," saying the stock is a bargain.
Analyst Charles A. Bradford of the Soleil Securities Group said in an investor's note that he is not changing his earnings estimates for Nucor, which are well below the consensus for 2009.
He said 2009 will be a difficult year and is forecasting earnings per share of $6.55 compared with a consensus estimate of $7.34 per share, according to analysts polled by Thomson Reuters.
"Yet we still believe that these shares are attractive to buy," Bradford said.
Nucor shares have a potential upside of more than 50 percent, he said. His target price remains $65.
Bradford said the enterprise value of Nucor company is trading at less than four times 2009 estimates of EBITDA (earnings before interest, taxes, depreciation and amortization), "not the lowest in the industry, but nearly the lowest," he said.
"We also expect these shares to be among the first to rally when the group goes back into favor with investors," Bradford said.
The sector has been hurt by dropping share price as investors seem to be selling commodity-related issues, fearing a global recession and a stronger U.S. dollar, he said. In the United States, the price of steel scrap has fallen by $300 a gross ton in recent weeks, but steel prices have dropped modestly, he said.
"Thus, company margins have been holding, although we expect further steel price weakness in coming weeks," Bradford said.
Shares of Nucor rose $2.10, or 5 percent, to close at $44.25. The stock is down 25 percent in the year to date.
Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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