Shares of steel producers rose Wednesday as analysts hiked earnings estimates and reiterated "Buy" ratings on several companies' stocks after strong first-quarter results.
Canton, Ohio-based Timken Co. reported a 14 percent first-quarter profit gain on capacity-expansion initiatives, surcharges, stronger pricing and the benefits of a weak dollar. Revenue rose 12 percent. Both results beat analyst estimates.
Citigroup analyst David Raso said in a client note that "this report, especially in the midst of very challenging auto news (strikes, production cuts, etc.), may begin a climb back into investors good graces, untapping a lot of value."
On Tuesday Pittsburgh-based United States Steel Corp. reported first-quarter profit and sales that topped analyst estimates.
Goldman Sachs analyst Aldo Mazzaferro, writing in a client note Wednesday, raised his full-year 2008 earnings per share forecast to $15.90 from $14.80.
He cited expectations for higher average selling prices in domestic flat-rolled steel and tubular operations, partly offset by weaker results in Europe.
Analysts polled by Thomson Financial expect, on average, full-year 2008 earnings per share for US Steel of $13.
Mazzaferro, who has a "Buy" rating on the stock, also raised his target price to $173 from $150.
"We think US Steel remains excellently positioned for upside earnings surprises due to its high sensitivity to steel price changes and relatively controlled raw material costs," he said.
Soleil Securities Group Inc. analyst Charles Bradford raised his earnings estimates and price target Tuesday on Charlotte, N.C.-based Nucor Corp., which last week beat analyst estimates with its first-quarter results.
"The outlook for the second quarter and the rest of the year is outstanding," he wrote in a client note.
In midday trading, shares of Timken jumped $4.58, or 13.7 percent, to $38.01, while US Steel rose $2.91 to $154.23 and Nucor Corp. shares rose $1.20 to $76.28.
Terms & Conditions
RSS Headlines
Fool UK