Jefferies Initiates Coverage On AKS

Jefferies is initiating coverage on AK Steel AKS with a Hold rating and a price target of $18. Says Jefferies, in its report, “While valuations look cheap relative to historical earnings, AKS' high cost structure and lack of vertical integration positions it poorly in the expected low utilization, high input cost, and intensifying competitive environment for carbon flat rolled steel. This and less favorable supply/demand dynamics for its specialty steel products make it unlikely it will reach prior peak earnings this cycle.” AKS closed yesterday at $16.61.