In view of the prevalent low steel spreads, financial services firm Jefferies sees potential mid-term challenges for Australia’s BlueScope Steel (ASX:BSL).
The firm expresses continued confidence in BlueScope Steel due to its high-quality steel-building products, distinguishing it from numerous global competitors.
The firm maintains a ‘buy’ rating citing that as an ‘investment appeal’ in the company.
Projections are made for weaker profits in FY24 and FY25 because of the anticipated lower Asian steel spreads as compared to the A$1.10 billion recorded in FY23.
Jefferies suggests that BlueScope Steel may likely suspend its share buy-back program by FY25, following the recent increase to A$400 million within the subsequent year.
Concurrently, Citi sustains a ‘neutral’ rating with a price target of A$23.50, predicting a short-term weakness in the U.S.
steel outlook.
Additionally, Citi enhances its FY24-FY25 EBIT estimates by 25% and 10%, respectively.
Currently, BlueScope Steel shares stand at A$21.17, a 0.5% decrease.
BlueScope Steel has received a ‘buy’ or higher rating from seven out of twelve analysts, four have given a ‘hold’ and one ‘sell’.
Their median price target is A$23.55 according to Refinitiv data.
BlueScope Steel (ASX:BSL) is a high-quality steel-building products firm distinctively different from its many global peers.