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National Bank’s Maxim Sytchev increased his target for Russel Metals Inc. to $58 from $55 with an “outperform” recommendation. Other changes include: Stifel’s Ian Gillies to $60 from $55.50 with a “buy” rating and RBC’s James McGarragle to $50 from $51 with an “outperform” recommendation. The average is $54.
“Russel continues to execute on its strategy admirably, closing out a significant year of two material acquisitions while continuing to invest in facility modernization and adding exposure to value-added capabilities and non-ferrous metals,” said Mr. Sytchev. “Despite the above outlays and the opportunistic repurchase of another 330k shares in the quarter, the company remained in a net cash position of $32-million. We have written extensively about these dynamics – including in our latest marketing with management – so none of these developments should come as a surprise. The incremental development in recent weeks, however, is the inflection of HRC prices back into the high US$700/st range amid accelerated talks of U.S. tariffs. As such, the “call option” on higher HRC now appears to be paying off. Given a strong record of execution and capital allocation, we believe RUS is well positioned to benefit from the current macro dynamic despite an elevated degree of uncertainty.
