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On Wednesday, RBC Capital adjusted its outlook on Vulcan Steel Ltd (VSL:AU), reducing the price target to AUD7.50 from the previous AUD7.75. Despite the adjustment, the firm maintained its Sector Perform rating on the stock.
The revision follows Vulcan Steel’s recent financial results which presented a mixed picture. The company’s EBITDA aligned with expectations, but an increase in depreciation and amortization expenses resulted in a net profit after tax (NPAT) that fell short of forecasts.
Vulcan Steel, a key player in Australasia’s steel and metal distribution sector, acknowledged the current market volatility and anticipates that trading activity will persist at subdued levels. However, the company expressed a belief that the market has reached the lowest point of the cycle.
The company's established position in the domestic market, with a significant fixed cost base, is seen as a potential advantage to capitalize on any upturn in the building and construction sectors. RBC Capital notes that it is looking for a definitive sign of increased activity in these areas before adopting a more positive stance on Vulcan Steel's prospects.
In conclusion, RBC Capital remains on the sidelines with its Sector Perform rating, awaiting market conditions that could signal a more favorable environment for Vulcan Steel's growth.
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