CMC - Commercial Metals slumps 6% after KeyBanc cuts shares

Commercial Metals ( NYSE: CMC ) -6.6% in Thursday's trading after KeyBanc downgraded shares to Sector Weight from Overweight as the stock nears the bank's previous price target and modest downward estimate revisions.

"Over the mid- to long term, we believe CMC will be a primary beneficiary from the multiyear U.S. infrastructure bill and organic investments in low-cost capacity, though we are tempered by the likelihood of some slowdown in private sector capex amid inflation and interest rate pressures acting as a demand outlook ballast," KeyBanc's Philip Gibbs wrote.

The analyst lowers his EBITDA estimate on the February quarter by 15% to $285M "via weaker U.S. mill and fabrication volumes vs. our previous estimate of flattish given a slower start to the year (weather and potentially end-user caution) and some incremental spread pressures."

"Given escalating scrap costs in the short term amid global restocking and higher coking coal, ore, slab and pig iron costs, CMC will likely need to attempt some price hikes in the spring to recover these margin pressures," Gibbs added.

Commercial Metals ( CMC ) is a "small but mighty" company, Volatility Surfer writes in an analysis published on Seeking Alpha .

For further details see: