AP News

AK Steel down after UBS analyst's downgrade


NEW YORK (AP) — Shares of AK Steel fell Tuesday after a UBS analyst said the company is likely to face pricing pressure from lower-cost imports and the expected resolution of a competitor's labor talks.

THE SPARK: Analyst Shneur Z. Gershuni downgraded AK Steel to "Sell," from "Neutral," and cut his 12-month price target on the stock to $4, from $5.50.

In June Gershuni downgraded AK Steel from "Buy" on worries about pricing, as well as a suspicion that it will have to make bigger-than-expected pension contributions in 2014. Those long-term issues remain, Gershuni said.

THE ANALYSIS: "We see heightened risk across our steel coverage," Gershuni wrote. But AK Steel has the most downside risk as steel prices decline. Also he wrote in a note to clients that competitor ArcelorMittal is likely to resolve its labor contract negotiations soon, adding to the pricing pressure.

The analyst also cited "liquidity concerns" for AK Steel, which has $1.23 billion in debt minus cash.

SHARE ACTION: Down 43 cents, or 7.6 percent, to $5.22 in afternoon trading. The shares have traded between $10.33 and $4.44 over the past 52 weeks.


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