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AK Steel double downgraded at BofA Merrill after weak guidance

Published 01/30/2019, 12:35 PM
© Reuters.  AK Steel double downgraded at BofA Merrill after weak guidance
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  • AK Steel (AKS +2.3%) is higher even after BofA Merrill Lynch downgrades shares two notches to Underperform from Buy and slashes its price target to $2.50 from $5 following the company's disappointing 2019 guidance.
  • BAML analyst Timna Tanners says higher contract prices into 2019 were eclipsed by higher raw material costs and maintenance needs.
  • As the most levered U.S. steel company she covers, Tanners says free cash flow is "critical" to AKS and that more limited debt paydown assumptions can hurt sentiment and limit its options.
  • Longbow Research also downgrades AKS to Neutral from Buy, seeing potential headwinds developing from slowing U.S. automotive demand, new carbon sheet supply entering the U.S. market and potentially higher iron ore prices.
  • Now read: AK Steel Holding Corp 2018 Q4 - Results - Earnings Call Slides


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