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On Monday, Jefferies analyst Cole Hathorn upgraded the rating for SSAB AB (SSABA:SS) (OTC: SSAAY) from Hold to Buy, while also increasing the price target from SEK57.00 to SEK64.00. The revised outlook is based on the anticipation that the fiscal year 2024 results will likely signal an end to the cycle of EBITDA downgrades. The company’s strong financial health, evidenced by a current ratio of 2.71 and an attractive P/E ratio of 7.8, supports this positive outlook. Hathorn pointed to signs that pricing in the US and EU markets has reached a low point and mentioned that inventory levels are reportedly low.
The analyst highlighted recent price hikes in the US plate market as a significant positive development for SSAB’s stock, with InvestingPro data showing a strong 14.75% return over the past week. He also addressed concerns about the capital expenditures and free cash flow that had previously impacted the company’s stock performance in 2024, when it declined by 42% compared to the SXPP’s 12% drop. Hathorn noted that these factors are now well-understood by the market, and SSAB’s updated project disclosures have provided reassurance. According to InvestingPro, the company maintains a strong financial health score, with 12 additional valuable insights available to subscribers.
SSAB, described by the Jefferies analyst as a "quality steel company," is also recognized for its attractive dividend yield, currently at 6.61%. The company’s updated financial strategies and market conditions have contributed to the improved rating and heightened price target, indicating a more optimistic outlook for SSAB’s financial performance in the near future. Based on InvestingPro Fair Value analysis, the stock appears fairly valued at current levels.
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