CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
We lift our 12-month target by $4 to $39, which values X at an EV/EBITDA of 5.5x our 2024 EBITDA estimate, below the peer group average forward EV/EBITDA of 7.0x, but above X’s three-year average of 2.9x. We raise our 2023 EPS view by $0.50 to $4.55 and 2024’s by $1.74 to $3.75. X posted Q3 adj. EPS of $1.40 vs. $1.95, $0.25 above consensus, driven by a top-line beat of 4%. Q3 adj. EBITDA fell 32% Y/Y, but beat consensus by 4.3%. Q3 free cash flow was $232 million, which is after spending $432 million on strategic capex related to ongoing projects. During the Q3 conference call, management stressed that 2024 consensus forecasts are much too pessimistic. Even when assuming a price headwind of an average price of $750/ton for the hot rolled coil benchmark, management projects adj. EBITDA staying flat in 2024 at around $2.0 billion, with lower raw material costs (including coal), $155-$210 million of incremental EBITDA from strategic projects, and $100 million in cost reductions within the flat-rolled segment.