Goldman Sachs Reiterates Neutral and PT of $16 on Commercial Metals Company

Goldman Sachs reiterated its Neutral rating and PT of $16 on Commercial Metals Company CMC. In a research report published today, Goldman commented on the changes in Commercial Metals' management, which includes naming Joe Alvorado as the new CEO. In the report, Goldman states, "We believe that change in the leadership of CMC is incrementally positive, as the company has struggled through the downturn and its exposure to the still weak non-residential market is not helping either. We believe that the new management will need to do further restructuring of businesses, in particular the money losing Croatian mill where turn-around efforts so far have not yielded any success. The other area where that will require focus is its downstream fabrication division, in our view. We believe that this business model is in need of streamlining, particularly its heavy dependence on highway projects where it bids for multi-year fixed-price contracts and has thus faced heavy losses as input (rebar) prices fluctuate in the market. However, we do not see much downside to CMC's stock after the recent correction but consider it “dead money” for the time being." On Tuesday, Commercial Metals Company closed at $14.77.