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On Tuesday, KeyBanc Capital Markets adjusted its outlook on Olympic Steel (NASDAQ:ZEUS), a leading national metals service center. Analysts at the firm have revised the company’s price target down to $41 from the previous $43, while maintaining an Overweight rating on the stock. According to InvestingPro data, the stock is currently trading near its Fair Value, with a market capitalization of $368 million.
The revision follows the company’s first-quarter earnings for the year 2025, which the analysts believe represent the lowest point for the company’s earnings per share (EPS) due to lagged contract pricing and timing challenges. Despite reducing the earnings forecast for 2025 based on higher than anticipated operational expenses, KeyBanc analysts remain optimistic about Olympic Steel’s financial performance, anticipating a rebound in earnings as the year progresses. InvestingPro analysis reveals the company maintains a healthy gross profit margin of 23.6% and analysts forecast profitability for the current year.
KeyBanc’s analysis suggests that Olympic Steel’s financial health is robust, with sufficient liquidity to support its mergers and acquisitions (M&A) growth strategy. The firm’s analysts expect Olympic Steel to leverage its free cash flow in a countercyclical manner, which could be beneficial in the face of economic headwinds.
The lowered price target to $41 reflects a more conservative earnings estimate for 2026. However, KeyBanc still projects significant year-over-year growth in both EPS and EBITDA for Olympic Steel. The Overweight rating indicates that analysts believe the stock could outperform the average return of the stocks that KeyBanc covers over the next 12 to 18 months.
The company’s strategic approach to growth through acquisitions, coupled with its financial resilience, provides the basis for the analyst’s continued positive outlook on Olympic Steel’s shares. KeyBanc’s revised price target and sustained Overweight rating signal their belief in the company’s potential for future earnings expansion and value creation for shareholders.
In other recent news, Olympic Steel reported its first-quarter 2025 earnings, revealing a mixed financial performance. The company’s earnings per share (EPS) came in at $0.21, falling short of analysts’ projections of $0.26. However, Olympic Steel’s revenue reached $493 million, surpassing the forecast of $473.75 million. Despite a decline in net income to $2.5 million from $8.7 million in the same quarter the previous year, the company managed to reduce its debt by $37 million to $235 million. Olympic Steel also expanded its operational capacity by opening a new facility in Houston. The company remains committed to its growth strategy, aiming for at least one acquisition per year. The firm has also extended its $625 million asset-based revolving credit facility for five years, ensuring access to flexible, low-cost capital. Analysts from KeyBanc Capital Markets and Stonegate have shown interest in the company’s strategic initiatives and its ability to manage macroeconomic challenges.
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