PKX - Posco downgraded at UBS with positives priced in after rising to 16-year highs

2023-07-26 14:28:35 ET

Posco ( NYSE: PKX ) shares pause their meteoric rise, -2.9% in Wednesday's trading after soaring 75% in July following the rollout of plans to spend more than $90B through 2030 to grow its core steel business plus electric vehicle battery materials and hydrogen.

UBS downgraded Posco ( PKX ) to Neutral from Buy on Wednesday, saying the company's strong fundamentals have been priced into the stock and a possible short squeeze could force valuations to overshoot.

"With valuation looking full now, we see little room for disappointments, especially lithium considering its future earnings contribution," UBS analysts wrote, adding that the bank's lithium price outlook is less optimistic than the company's, forecasting $22.5K/ton in 2030 vs. Posco's ( PKX ) assumption of $30K/ton.

Citigroup cut the stock to Neutral earlier this week , expecting volatility as retail investors look for opportunities to take profits.

More on Posco:

• Financial and valuation comparison to sector peers
• Analysis: Posco: Watch Shareholder Capital Return And Investor Relations Plans
• Stock price return: Up 138% YTD, up 181% in the past 12 months

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