The share price of the ASX-listed BlueScope Steel Limited (AU:BSL) rose by 2.24% on Wednesday following a rating upgrade by Macquarie. Analysts at Macquarie are bullish on the company’s outlook and upgraded their rating from Hold to Buy while raising the price target from AU$19 to AU$24. The new price target implies an upside of around 10% from the current price level.
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BlueScope is a manufacturer and supplier of steel, catering to the building and construction industries. The company provides its products across 16 countries globally.
Macquarie’s Bullish View
Macquarie has a highly optimistic stance on steel prices in the U.S. market. Analysts at the firm also project a potential recovery in global steel prices in the upcoming fiscal year, which could support the company’s share price. Analysts stated that the company could witness some near-term weakness in prices, but the long-term prospects remain strong.
In light of the improvement in the market backdrop, Macquarie expects the company’s earnings recovery to start in the second half of FY24. Macquarie’s FY25 net profit estimates for the company are encouraging and around 45% above the consensus.
In FY23, BlueScope delivered an underlying EBIT of $1.61 billion, which was 60% below last year’s record performance. However, the company’s numbers were in line with analysts’ forecasts and depicted its resilience in a difficult macro environment.
The company expects its underlying EBIT for the first half of FY24 to fall within the range of AU$700 million to AU$770 million. The results for 1H24 are scheduled for publication in February 2024.
Is BlueScope Steel a Good Buy?
Following the rating upgrade, BlueScope shares reached their highest level since September. Year-to-date, the stock has gained around 30% in trading.
As per the consensus rating on TipRanks, BSL stock received a Hold rating backed by four Buy, two Hold, and two Sell recommendations. The BlueScope share price forecast is AU$21.43, which is 2.53% lower than the current level.
