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On Tuesday, CFRA analyst Hazim Bahari revised the price target for Posco (NYSE:PKX) shares, increasing it to $36.00 from the previous $34.00, while continuing to recommend a Sell rating on the stock. The new target reflects a valuation of the stock at 0.30 times its projected 2025 price-to-book value (P/BV), which is 40% below the five-year average for the company. Currently trading at $46.04 with a P/B ratio of 0.37x, InvestingPro analysis indicates the stock is slightly overvalued at current levels.
Bahari anticipates a revenue decrease of 2% for Posco in 2025, with a potential recovery of 5% in 2026. The operating profit margin is expected to see a modest rise, ranging from 3.7% to 4.2%. The forecast takes into account the ongoing global steel oversupply and low lithium prices, with estimates placing lithium carbonate trading between $8,500 and $9,500 per ton in 2025. These market conditions are likely to push back Posco’s lithium project developments in Argentina to the first quarter of 2026. InvestingPro data shows the company’s current gross profit margin at 7.52%, reflecting these challenging market conditions. Despite these headwinds, Posco maintains strong liquidity with a current ratio of 1.89.
Despite the near-term challenges, Posco’s strategic initiatives, such as the joint venture with Hyundai Motor (OTC:HYMTF) Group in Louisiana and the partnership with JSW in India, are seen as positive moves for the company’s long-term positioning. However, these ventures are accompanied by significant capital expenditures, with a planned investment of 8.8 trillion Korean won in 2025. Notably, InvestingPro highlights Posco’s impressive 33-year track record of consistent dividend payments, demonstrating its commitment to shareholder returns even during investment-heavy periods.
The analyst has also updated the earnings per share (EPS) forecast for Posco, raising the 2025 EPS estimate to 4,429 Korean won from the previous forecast of 3,513 Korean won. Conversely, the 2026 EPS prediction has been decreased to 5,509 Korean won from an earlier estimate of 5,589 Korean won. The revisions reflect expectations of continued weak demand for steel and battery materials in 2025 due to a sluggish global economic outlook. With a market capitalization of $14.58 billion and annual revenue of $48.9 billion, Posco maintains its position as a prominent player in the global steel industry.
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