Nucor (NYSE:NUE) was upgraded to Buy at Citi on Wednesday, with the firm also downgrading Cleveland-Cliffs (NYSE:CLF) to Neutral in a research note.
The firm assigned NUE a new price target of $240 per share, up from $180, saying the stock is underrated relative to its ROIC and FCF – high-quality industrials are the right comps.
"We expect investors to be quite skeptical on this argument, but that's the opportunity," said analysts at the investment bank.
The CLF price target was kept at $22 per share. Citi said they lowered the stock's rating as its EBITDA has underwhelmed relative to the strength of underlying steel markets.
Overall, Citi remains a mid-term steel bull but acknowledges the slowing US economy is a key risk and that steel stocks won't outperform in a recession.