Morgan Stanley is out with a research report on Nucor Corporation NUE and is upgrading shares to Overweight with a $51 price target.
In a note to clients, Morgan Stanley writes, "Despite the recent sell-off, we think it is too early to buy the group as a whole. We would invest selectively, and recommend AKS ($8.18), our top pick, for stock-specific reasons, and NUE ($32.61), an upgrade, as a defensive play with considerable upside. Our new base case incorporates slower steel demand growth in 2H11 and 2012. We are trimming our estimates (by 18% on average) and price targets (by 22% on average). We are rotating into NUE and out of X ($27.25) and STLD ($11.67). Despite large upside to our X and STLD price targets, NUE's Sharpe, Treynor and base/bear ratios point to better risk-adjusted returns. We believe NUE's
variable and low cost structure, more solid balance sheet and high dividend yield will support the shares near current levels."
Shares of NUE closed at $32.61 yesterday.
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