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On Friday, Jefferies upgraded Nippon Steel Corp (5401:JP) (OTC: NSSMY) stock from ’Underperform’ to ’Hold’ and increased the price target to ¥3,200 from ¥2,200. The revision follows the company’s third-quarter earnings for the fiscal year ending March 2025, which prompted the firm to adjust its forecasts for the steel manufacturer.
The upgrade reflects Jefferies’ view that Nippon Steel is unlikely to complete the acquisition of US Steel, which would have incurred a substantial termination fee of $565 million. According to the firm, avoiding this acquisition is advantageous for Nippon Steel as it eliminates the need to raise equity, allowing the company to maintain its dividend payments at the same level year over year.
Jefferies highlighted Nippon Steel’s strong balance sheet (B/S) as a key factor supporting the stock price. The firm also pointed out that the high dividend yield offered by Nippon Steel is attractive to investors and contributes to the stock’s value.
Additionally, Jefferies noted that stable domestic margins provide a reliable earnings base for Nippon Steel. This stability, combined with the company’s financial position, forms the basis for the updated rating and price target.
The new price target of ¥3,200 represents Jefferies’ adjusted expectation for the stock’s performance, taking into account the recent earnings results and the strategic developments regarding the potential acquisition.
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