UBS upgrades Steel Dynamics and Nucor stocks to buy

UBS has upgraded its ratings for two steel companies, Steel Dynamics and Nucor, following recent tariffs imposed by President Donald Trump. The bank believes these tariffs have created a good investment opportunity. Steel Dynamics was upgraded from neutral to buy. UBS set a price target of $149 for the stock, indicating it could rise by 21.5% from its previous close. Nucor's price target was also increased by $4 to $160, suggesting a potential 31% increase. Analyst Andrew Jones noted that since Trump's election, the protection for U.S. steel and aluminum has been stronger than expected, resulting in a rise in hot-rolled coil steel prices. Despite recent declines in stock prices for both companies, Jones believes demand will stabilize due to reshoring efforts and strong import protection, although he anticipates a slight drop in overall U.S. steel demand this year. Steel prices have risen to $945 amid efforts to replace lost imports. Though Jones expects prices to drop to around $800 per ton by 2026 to 2028, he sees potential for significant cash returns from Steel Dynamics in the coming years. For Nucor, he also anticipates medium-term growth due to tariff impacts. UBS analysts expect improved market conditions and a resolution to ongoing trade disputes, which could support domestic steel demand. The outlook for both Steel Dynamics and Nucor remains positive, with shares gaining in early trading after the upgrades. On Wall Street, opinions on Steel Dynamics are mixed, while outlooks for Nucor are more favorable.