BlueScope shares rise as Jarden sees benefit from US tariffs
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The news: BlueScope Steel shares rose on a weak day for the broader market as Jarden upgraded its rating on Australia’s biggest steelmaker.
The numbers: BlueScope shares were up 1.1% to $21.82 at 12:29pm AEDT, while the ASX 200 was down 1.2%
Jarden upgraded its rating on the stock from 'underweight' to 'overweight' and lifted its target price from $23.20 to $24.
The context: Jarden analysts said the upgrade was driven by better-than-expected first-half earnings paired with a recent pull back in the company's share price.
They also noted that the US government's efforts to protect US industry benefits BlueScope, which operates five businesses in North America.
The new measures are expected to increase demand for US steelmaking and reduce foreign competition, leaving BlueScope's North Star operation in Ohio as a net beneficiary, they said.
What they said: "Had it not been for increased risk of demand destruction amid softening US economic outlook, inflationary cost pressures and opportunistic US HRC steel price hikes, we would be even more positive," the analysts said.
"Our positive view takes into consideration the expected widening gap between US and Asian steel spreads, recovering Australian construction markets, capex-led earnings growth, self-help cost initiatives, and management's sound track record around capital allocation."
The source: Jarden research
