Nucor shares hit lows not seen in 135 weeks on Friday, Bank of America Merrill Lynch double downgrades stock to “Underperform” on lower short-term steel prices

Shares of Nucor Corp plunged to lows not seen in 135 weeks on Friday after Bank of America Merrill Lynch double downgraded the stock from ”Buy” to ”Underperform”, as it cited lower short-term steel prices, especially for products such as sheet and rebar.

The brokerage also revised down its 12-month price target on the stock from $68 to $50 per share.

Nucor shares closed lower for a seventh consecutive trading session in New York on Friday. The stock went down 2.60% ($1.28) to $48.00, after touching an intraday low at $47.34, or a price level not seen since October 28th 2016 ($46.64).

Shares of Nucor Corp have retreated 7.35% so far in 2019 compared with a 9.78% gain for the benchmark index, S&P 500 (SPX).

In 2018, Nucor Corp’s stock went down 18.51%, thus, it again underperformed the S&P 500, which registered a 6.24% loss.

In March, Bank of America Merrill Lynch warned that steel capacity in the United States was poised to surge by 20% around year 2022, which would pressure steel commodity prices. The firm labels the upcoming several-year period of disturbance as “Steelmageddon”.

The steel glut is expected to sweep through the industry during the upcoming several years, as an oversupply of steel commodities is created by new project startups, the brokerage said. The firm, however, expects the US industry to eventually emerge with a smaller footprint, as older blast furnaces are replaced by new electric arc furnaces.

According to BofA Merrill Lynch analyst Timna Tanners, three of the products, which are likely to be most severely affected by new supply, are produced by Nucor Corp – sheet, plate and rebar.

According to CNN Money, the 12 analysts, offering 12-month forecasts regarding Nucor Corp’s stock price, have a median target of $65.00, with a high estimate of $80.00 and a low estimate of $50.00. The median estimate represents a 35.42% upside compared to the closing price of $48.00 on May 31st.

The same media also reported that 11 out of 15 surveyed investment analysts had rated Nucor Corp’s stock as “Buy”, while 4 – as “Hold”.

Weekly Pivot Levels

By using the traditional method of calculation, the weekly levels of importance for Nucor Corp (NUE) are presented as follows:

Central Pivot Point – $48.94
R1 – $50.53
R2 – $53.07
R3 – $54.66
R4 – $56.26

S1 – $46.40
S2 – $44.81
S3 – $42.27
S4 – $39.74