Dahlman Rose Raises Price Target on Steel Dynamics Inc. (STLD)

Dahlman Rose is out with a research report this morning, where it reiterates its Buy rating on Steel Dynamics Inc. STLD; it has a $24.00 price target on the stock, up from $17.00. The DR analysts cited the company's recent Q4 EPS guidance, which was in-line with their estimates; the guidance excludes the impact of an expected EPS impairment charge of $0.04 - $0.05 related to its fabrication operations. The analysts noted that the company indicated that improving order entry and pricing for its sheet operations are being offset by lower volumes and pricing in the beginning of 4Q10. As for valuation, the analysts remarked, “We obtain our price target by applying a 6.0x EV/EBITDA multiple to our 2012 EBITDA estimate. We anticipate that steel prices will average $700 - $725/s. ton in 2012 and that steel mill utilization will average 80 - 85%. We maintain our 2011 steel mill utilization and price estimate of 70 - 75% and $650 - $675/s. ton, respectively.”