Wolfe Research Reiterates Underperform Rating on Steel Dynamics (STLD)

Wolfe Research analyst Timna Tanners reiterated an Underperform rating and $112.00 price target on Steel Dynamics (NASDAQ: STLD)

The analyst comments "Mgmt's guided Q2E EPS to $2.64-2.68 missed consensus $2.98 and our Street-low $2.70 in Mon's mid-qtr update. Steel Operations earnings were seen "meaningfully lower" as qtd hot rolled coil (HRC) prices have fallen 16% q/q, affecting the ~3/4 of tons generally contracted on monthly/qtrly lags. Q3E's price outlook remains tough so far with July contract customers on CRU indices down to ~$680-710/st HRC after discounts from nearly $1000/st in Jan. Volumes were seen flat q/q amid Sinton disruptions, specifically a planned April outage and reported unplanned May one. Steel Fabrication results were guided flat q/q as better seasonal shipments helped offset lower prices. Mgmt previously had said prices "stabilized," and joist and deck backlog through Q424 was consistent with typical 1-2 qtr lead times. Mgmt was constructive demand, more positive than our recent Wolfe State of Steel survey, attributing sentiment weakness to falling scrap prices."

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Shares of Steel Dynamics closed at $120.69 yesterday.

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