On Wednesday, Reliance Steel & Aluminum (NYSE:RS) shares saw its price target adjusted by KeyBanc, dropping to $325.00 from the previous target of $341.00. Despite the reduction, the firm maintained its Overweight rating on the company’s shares. The adjustment reflects a tempered outlook for the carbon steel sector, with expectations for further EBITDA normalization in the years 2024-2025.
The analyst from KeyBanc shared insights on the anticipated market dynamics, noting a shift from pricing and spread factors to a focus on organic steel volumes, which are now projected to be flat or potentially decline year-over-year in 2025. This contrasts with previous expectations of relatively stable volumes.
The revised projections take into account modest growth in the automotive sector and a somewhat weaker outlook for other markets, including industrial manufacturing, construction, and oil & gas, as indicated by industry metrics such as the ISM and ABI indexes.
The firm’s analysis also includes revised estimates for carbon steel pricing and scrap costs, which have been lowered in light of the updated market view. Despite these adjustments, KeyBanc’s stance on Reliance Steel remains positive, supported by the Overweight rating. The analyst emphasized a balanced view on carbon steel equities, acknowledging the challenges while also recognizing the potential for continued investment in the sector.
Reliance Steel & Aluminum, a prominent player in the metals service center industry, is navigating an evolving landscape marked by variable demand and pricing pressures. The company’s current stock price trajectory and market performance will be closely watched by investors as it aligns with the broader economic indicators and sector-specific trends.
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