Morgan Stanley believes the recent strength in the share price more than accounts for the positive momentum in steel prices. The broker believes investors should capitalise on the strength in the share price and downgrades to Equal-weight from Overweight.
Earnings (EBIT) forecasts are reduced by -9% for FY20 and -16% for FY21. While an improving steel price is positive, further price and spread increases are required to support forecasts. Morgan Stanley reduces the target to $13.50 from $14.00. Industry view: Cautious.
Target price is $13.50.Current Price is $13.95. Difference: ($0.45) – (brackets indicate current price is over target). If BSL meets the Morgan Stanley target it will return approximately -3% (excluding dividends, fees and charges – negative figures indicate an expected loss).