Commercial Metals Company, the Basic Materials sector company, was revisited by a Wall Street analyst yesterday. Analyst Sathish Kasinathan from Bank of America Securities reiterated a Buy rating on the stock and has a $80.00 price target.
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Sathish Kasinathan has given his Buy rating due to a combination of factors tied to Commercial Metals Company’s stronger-than-expected operating performance and improved long-term earnings profile. The company’s latest quarterly EBITDA came in meaningfully above both his and the market’s forecasts, driven by robust results in the North America steel and construction solutions businesses, even though Europe was softer. He also notes that management’s guidance for only a slight sequential EBITDA decline in the next quarter is better than consensus, underpinned by stable metal margins, healthy bidding activity, and growing downstream backlogs. In his view, CMC is structurally well placed to benefit from a firm North American long steel market while executing on its cost-savings program, which is on track to deliver substantial run-rate efficiencies by fiscal 2026.
In addition, Kasinathan highlights the strategic acquisitions of Concrete Pipe & Precast and Foley Products, which transform CMC into one of the largest precast suppliers in the U.S. and meaningfully increase the company’s exposure to higher-margin, less volatile construction solutions. He expects these precast assets to produce significantly better margins than CMC’s legacy steel operations, raising the share of EBITDA from the construction solutions segment over the next few years and supporting a valuation re-rating. While leverage will temporarily rise following these deals, he anticipates a rapid decline in net debt to below 2x EBITDA by the end of fiscal 2026, creating scope for enhanced shareholder returns. Taken together, these operational, strategic, and balance sheet dynamics underpin his positive view and justify maintaining a Buy rating with upside to his price objective.
In another report released yesterday, Jefferies also reiterated a Buy rating on the stock with a $85.00 price target.
CMC’s price has also changed moderately for the past six months – from $51.960 to $70.610, which is a 35.89% increase.