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Commercial Metals' Stock Price Offers Attractive Entry Point, UBS Says in Upgrade

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Commercial Metals' Stock Price Offers Attractive Entry Point, UBS Says in Upgrade

Commercial Metals' (CMC) current stock price offers an attractive entry point for investors as downside risks to US rebar pricing have eased, UBS Securities said in a client note sent Thursday.

The steel maker's shares have underperformed its peers by about 40% so far this year, "creating attractive entry as key downside risks to US rebar pricing have eased," UBS analysts, including Andrew Jones, wrote.

UBS upgraded its rating on the stock to buy from neutral and raised the 12-month price target to $89 from $79.

Shares of Commercial Metals were up 3.6% intraday Thursday.

UBS' change in view reflects factors including import pressure peaking, with first-quarter imports already tracking in line with historical averages.

"We now see near-term downside risk to US rebar imports," versus upside risks previously expected, amid a closed import arbitrage window, Jones said.

UBS is looking at roughly $1.6 billion in 2027 earnings before interest, taxes, depreciation, and amortization for Commercial Metals, compared with the consensus of about $1.4 billion.

"Domestic capacity also appears less disruptive, with (rival) Hybar nearing steady state (and) most incremental supply concentrated among disciplined incumbents," Jones said, referring Commercial Metals and Nucor (NUE). This reinforces "a more stable, duopolistic market structure," he added.

Price: $73.00, Change: $+2.67, Percent Change: +3.80%

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