UBS maintains Commercial Metals stock with $49 target

On Monday, UBS reiterated its Neutral rating on Commercial Metals Company (NYSE:CMC) while maintaining a $49.00 price target, falling below the broader analyst target range of $50.87 to $68. According to InvestingPro data, the company maintains a GOOD financial health score, with three analysts recently revising their earnings estimates upward. The firm’s analyst, Curt Woodworth, acknowledged a positive turn in import protection measures that were not anticipated in their previous analysis. According to Woodworth, the reinstatement of a 25% tariff on all imports, including downstream goods, and the firm stance against Canada have led to rapid price increases. These developments could drive earnings momentum and potentially lead to consensus upgrades through 2025.

Woodworth noted that since the downgrade in December, the unexpected policy changes have provided a foundation for earnings growth. The company’s strong financial position is evident in its impressive 55-year streak of maintaining dividend payments, with a current yield of 1.55% and 12.5% dividend growth in the last twelve months. He also mentioned that both Commercial Metals and Steel Dynamics (NASDAQ:STLD) have the potential for additional organic growth extending into 2026 and beyond. Despite shares underperforming due to concerns over an escalating trade war, the analyst suggested that the sector might still benefit from the tariffs that have been enacted.

The analysis by UBS comes after a period where Commercial Metals’ stock did not perform as well as the commodity market due to fears of increased trade tensions. However, the recent government actions regarding import tariffs have created a more favorable environment for the steel industry, which could lead to an improved outlook for companies like Commercial Metals.

Woodworth’s comments indicate that the protective measures could offset the negative impact of a potential trade war on the sector. He believes that these measures could present an attractive opportunity for investors considering the sector’s overall benefits from the tariffs.

Commercial Metals Company, along with others in the steel industry, may now be in a position to capitalize on the recent policy changes. With a current ratio of 2.82 and moderate debt levels, the company appears well-positioned to navigate market challenges. The UBS analyst’s reiteration of the Neutral rating and price target reflects a cautious optimism based on the current trade environment and its implications for the company’s financial performance going forward. For deeper insights into CMC’s valuation and growth prospects, including exclusive ProTips and comprehensive financial analysis, visit InvestingPro, where you’ll find detailed research reports covering 1,400+ top stocks.

In other recent news, Commercial Metals Company (CMC) reported its financial results for the second quarter of fiscal year 2025, which showed a slight miss on earnings per share (EPS). The company posted an EPS of $0.26, falling short of the anticipated $0.30, while revenue met expectations at $1.75 billion. Despite the earnings shortfall, the company remains optimistic about its future performance, with expectations of improved financial results in the third quarter. CMC is expanding its production capabilities, including the Arizona O2 Micromill, which is expected to enhance capacity and efficiency.

Analysts have noted the company’s strategic initiatives aimed at driving growth and operational excellence, which include a revised full-year capital spending plan of $550-600 million. The company is also focusing on increasing margins and optimizing logistics to drive cost efficiencies. There is a strong demand in key markets such as construction and infrastructure, which CMC anticipates will support a financial rebound. Additionally, CMC’s CEO expressed confidence in the company’s trajectory, highlighting ongoing projects and market opportunities, particularly in Europe.

Looking ahead, CMC is committed to growth and operational excellence, with plans to invest in both organic and inorganic growth opportunities. The company is targeting segments of the early-stage construction market that offer higher, more stable margins. CMC’s strategic efforts are expected to generate sustainable financial benefits over the coming quarters, positioning the company for long-term success.

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