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Analysts at Citi have significantly adjusted their forecasts for BlueScope Steel (ASX:BSL) following the company’s warning of a sharp earnings decline in fiscal 2025. The steelmaker’s outlook for underlying operating earnings in the first half of FY 2025 is now projected to fall between AU$350 million and AU$420 million, with the midpoint representing a 24% drop from the Visible Alpha consensus estimate.
In response to this gloomy forecast, Citi has revised its earnings estimates for BlueScope Steel, cutting its FY 2025 and FY 2026 underlying EBIT projections by 8% and 6%, respectively. Consequently, the brokerage has also reduced its price target for the stock to AU$23.00 from AU$23.70. This adjustment reflects the anticipated impact of lower earnings and increasing capital expenditure on the company’s financial performance.
Jefferies analysts have echoed these concerns, noting a lack of positive external data points that might suggest a turnaround in steel pricing or macroeconomic conditions. They argue that BlueScope Steel’s current forecast appears skewed to the downside, further compounding investor uncertainty. The absence of supportive market signals raises questions about the steelmaker's ability to recover in the near term.
The brokerage landscape is currently cautious about BlueScope Steel’s prospects, highlighting the challenges faced by investors navigating a period of reduced earnings and rising capital expenditures. The company’s stock has already declined by 15% year-to-date, reflecting growing concerns about its financial outlook and operational performance.
As BlueScope Steel grapples with these challenges, investors are advised to carefully consider the implications of the revised earnings estimates and reduced price target. The steelmaker’s ability to manage through this period of lower earnings and heightened capital spending will be crucial in determining its future trajectory. Analysts will be closely monitoring any further developments or market signals that could influence BlueScope Steel’s performance and investor sentiment in the months ahead.
