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Nucor Shares Rise On Better-than-expected Outlook

The Associated Press

PITTSBURGH (AP) — Shares of Nucor Corp. rose Tuesday after the steel producer issued guidance for a smaller-than-expected second-quarter loss, saying its orders had risen recently.

The Charlotte, N.C.-based company said it anticipates a loss of 55 cents to 65 cents per share for the three months ending July 4. That would compare with a profit of $1.94 per share during the second quarter of 2008.

Analysts surveyed by Thomson Reuters, on average, had been forecasting a loss of 69 cents per share on revenue of $2.32 billion. Those estimates typically exclude one-time items.

In April, Nucor reported a quarterly loss of 60 cents per share — its first loss ever — and forecast an even bigger loss in the second quarter, though it did not provide specific guidance. It said steel market conditions were the worst it had ever seen.

In a note to investors Tuesday, Credit Suisse analyst David Gagliano wrote that his firm raised its second-quarter earnings estimate for Nucor to a loss of 60 cents from a loss of 87 cents and its full-year estimate to a loss of 78 cents from a loss of $1.05.

The firm also boosted its price target on Nucor's stock to $55 from $50 "to reflect our view the market will continue to reward directionally positive news flow in the near-term," he wrote.

Gagliano wrote that several factors suggest the second quarter "will mark the trough in the current steel earnings cycle."

They include Nucor's recently improved orders, increasing operating rates at U.S. steel mills, stabilized and improving steel prices, low steel inventories at distributors, and a customer survey indicating demand should increase in the coming months.

Shares of Nucor rose $1.09, or 2.4 percent, to $46.84 in afternoon trading. Earlier in the session, the stock climbed more than 3 percent.