Citigroup Ups Nucor to Buy from Hold

Analyst John Hill says global steel supply imbalances appear to be easing

Citigroup upgraded Nucor (NUE) to buy from hold, noting that global steel supply imbalances appear to be easing.

Analyst John Hill remains positive on global steel. He thinks the industry is stronger at the company level than China-centric macro data would suggest. Given stable steel, scrap prices, and lower natural gas costs, he ups his $2.10 first quarter earnings per share (EPS) estimate to $2.17 (vs. $1.90 to $2.10 guidance.) He notes that the higher estimate is mostly driven by lifting long products pricing estimates (47% of mill shipments in 2005) closer to fourth quarter realizations, which lifts expected earnings before interest taxes (EBIT) to $105 per ton from $103. He ups his $8.55 2006 estimate to $8.62.

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