Zacks Investment Research downgraded shares of AK Steel Holding Corporation (AKS) from NEUTRAL to UNDERPERFORM on July 02, 2012, with a target price of $4.75.
We are downgrading our recommendation on AK Steel to Underperform due to the challenging steel pricing environment. The company's first-quarter 2012 net loss of $0.11 per share matched the Zacks Consensus Estimate. Revenues dipped 4.6% year over year to $1,508.7 million, trailing the Zacks Consensus Estimate. Moving ahead, the company expects to post a profit in the second quarter. While AK Steel is expected to benefit from the strength in the automotive market, we are concerned about its high cost structure, the challenging operating environment in overseas markets, softness in the construction market and weaker international electrical steel prices. We expect pricing pressure to weigh on the company's results moving ahead.
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