Friday, KeyBanc Capital downgraded Gerdau AmeriSteel Corp. (GNA) shares to Hold from Buy. The brokerage lowered its 2009 EPS estimate to $0.30 from $1.15.
Analyst Mark Parr said that his estimate revision reflects greater near-term earnings downside via easing metal spreads vs. second half of 2008, weaker capacity utilization rates near 40%, and high inventory levels relative to demand in the bar and structural supply chain. Additionally, near-term mismatches between current market product values and relatively higher cost billet and finished product inventories could drag on earnings for the next quarter or two.
This, in combination with weaker than expected fourth quarter performance and incremental pressure on metal spreads during first half of 2009, is driving a significant reduction to the analyst's 2009 outlook for GNA. In the analyst's view, reduced opportunity for any near-term pick up in earnings limits near-term upside potential for the stock. Concurrent with this outlook, the analyst downgraded the stock to Hold.
The analyst believes GNA is well positioned to directly benefit from any meaningful increase in infrastructure stimulus spending. However, the analyst sense near-term benefits could be partially muted by above-average months-on-hand of bar and structural service center inventories, which likely reflects delays in resumption of infrastructure momentum.
The analyst believes GNA is soundly capitalized to ride out a downturn via no major refinancing commitments until 2011 and solid operating cash flow generation, but he would wait for more concrete evidence of stimulus traction and inventory de-stocking to become more constructive on GNA shares.
Currently, GNA is down $0.51 or 9.21% and trading at $5.03.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.