BlueScope Steel pre-reported group operating income of $530m. UBS’s focus is on guidance which shows the company targeting second-half operating income of $750-$830m, in line with consensus albeit lower than the broker’s initial forecast for $1,015m.
The less than expected guidance was on account of lower realised pricing at North Star operations and higher spread costs at Australian Steel Products. UBS notes with volumes already at high levels, the chance for an upside surprise in volume growth could be limited.
The broker retains a Neutral rating and reduces the target to $18.04 from $18.25.
Target price is $18.04.Current Price is $17.28. Difference: $0.76 – (brackets indicate current price is over target). If BSL meets the UBS target it will return approximately 4% (excluding dividends, fees and charges – negative figures indicate an expected loss).