Thursday, July 15, 2010

Goldman (NYSE:GS) Upgrades AK Steel (NYSE:AKS), Stock Surges

After Goldman Sachs (NYSE:GS) analyst Sal Tharani upgraded AK Steel (NYSE:AKS) from "Neutral" to "Buy," the stock soared.

The reasoning behind the upgrade was the continuing drop in the price of iron ore, which in the mid-term should help the company's share price.

The difference between AK Steel and its competitors is AK buys iron ore, while others who own their own mining projects suffer from the lower prices, giving AK an upper hand while that situation lasts.

In the short term, this may not be that important, but over time it will definitely be a plus for AK, according to Tharani. He added that the very profitable specialty steel segment isn't reflected in AK's share price, another reason for the upgrade.

Spot iron ore prices in China have plunged 35 percent since April 2010.

No comments: