We are downgrading our recommendation on AK Steel Holding Corp. (AKS) to Underperform due to the challenging steel pricing environment. The company’s first-quarter 2012 net loss of $0.11 per share matched the Zacks Consensus Estimate. Revenues dipped 4.6% year over year to $1,508.7 million, trailing the Zacks Consensus Estimate.
Moving ahead, the company expects to post a profit in the second quarter. We are concerned about its high cost structure, the challenging operating environment in overseas markets, softness in the construction market and weaker international electrical steel prices. We expect pricing pressure to weigh on the company’s results moving ahead.
Our long-term Underperform recommendation on the stock indicates that we believe it will perform below the market. Our price target of $4.75 is based on 79.2x our fiscal 2012 earnings estimate.
AK STEEL HLDG (AKS): Free Stock Analysis Report
