Monday, March 8, 2010

Goldman gets bullish on steel again--now?

Now they have a target of $70, because of higher ore prices? (Page 2 of their report)

On January 6 Goldman upped X, and you can read that upgrade here.

On January 22, they downgraded X to a buy.

On January 27, Goldman then downgraded X to neutral, cutting the target to 55, saying there wasn't any near term catalysts to move X.

Notice how Goldman downgraded X, when Goldman as a firm was buying and goosing the credit default swaps on Greece. Knock the material stocks down, and then, people will believe the world economy will go to hell!

So what do they need to do? You can't pick on Greece. Or maybe they need to offload the paper they bought when they downgraded it!

Hah! You gotta love Goldman playing both sides and knocking their clients silly!

Can you imagine what would happen if Goldman was the Cap-Ex manager for X???
gs main 0308                                                              


Anonymous said...

greatcall...i chickened out in the low 40s but have kept this on screen and i'm just amazed at how hard it has run up!

Sam said...

Maybe new shit has come to light, man.

But, X = trouble. Too many momos chasing it and with GS jerking it around, it is easy to get burnt.

palmoni said...

UBS has a diiferent take--what they think about SCHN (scrap) Steel

We think extreme winter weather propped prices and higher iron ore spot is largely baked into a
~$150/t hike from Nov troughs. With seasonal tightness thawing in Q2, we see limited scrap
price strength ahead. Domestic mini-mill utilization is unlikely to rise much amid deteriorating
construction mkts. So exports are likely necessary for better demand, and while we see
potential for growth, we also see buyers being price sensitive

Anonymous said...

any idea why V is so strong?

palmoni said...

V was pushed by Deutsche Bank this morning give me a minute and I'll post it

palmoni said...

I guess Deutsche likes them both I read it this morning and thought they were more bullish on V than I remember-so it must of been someone else pushing it

V analyst day could be positive catalyst, prefer to be overweight MA Visa hosts its 1st
analyst day this Thurs in SF and this note lists key questions for mgmt. We expect a
high-level meeting, w/ only real #s update to be spending trends thru Feb. We expect
formal remarks to mostly focus on new growth areas such as prepaid/ecommerce/
mobile/money transfer, with greater attention to prepaid/e-commerce as V
believes opps there are more near-term. We are buyers of both, but prefer MA given
too-steep 30% P/E discount to V, recent inflection in credit/cross-border, higher margin
upside, mkt share gain potential, and Europe.
􀂄 Thoughts ahead of V analyst day We do not expect any changes to FY10 guidance this
Thurs, but V is likely to update the mkt on payment vols through Feb, and we expect
V’s trends to agree with the recent positive Feb spending update from MA. For
reference, V’s US payment vols were +10% in Jan vs. +7% in the Dec Q. Cross-border
was +9% in Jan vs. +2% in the Dec Q. Transactions were +13% in Jan vs. +12% in the
Dec Q. We believe most time will be spent addressing 4 key growth areas: Prepaid,
Ecommerce, Mobile payments, Person-to-person remittances. Of these, we think the
mkt will want to learn most about how V is addressing the prepaid opportunity—sized
by V recently at $3 trillion globally—as well as what V’s plans are to capture more share
online. One new offering expected to be demoed is called RightClick, which we
understand to be V’s latest answer to PayPal.
􀂄 Why we prefer to be overweight MA right now MA is our top large cap long pick for
2010 as we think the 30% P/E discount to V is too steep and should move down to the
15-20% range given our view that MA could benefit disproportionately from an eventual
recovery in credit/cross-border vols growth (both reached inflection points in 4Q09), has
better margin upside potential (starting from lower base), and could be a net market
share gainer this yr (SunTrust and perhaps more to come). We view Europe exposure
as a positive, w/ only MA able to capitalize on SEPA-related opps that far surpass FX
and/or sovereign risks, in our view. We believe macro conditions can support--and the
mkt will pay for--revs growth acceleration from +2% in ‘09 to +9% in ‘10, allowing for
EPS growth acceleration from +24% in the worst year of consumer spending
retrenchment MA has experienced, to +27% in ‘10. And if MA needs it, there is
significant cushion in G&A line this year (we estimate +$0.70 above our $14.20).
􀂄 Valuation and risks: Visa Our $115 PT is based on a combo of our comps, normalized
earnings and DCF analysis (details inside). At $115, V would trade at fwd P/E of 28x
our CY10 EPS, or a PEG of 1.1x, in line w/ peer group median. Risks: interchange
litigation, regulatory, slowdown in domestic/cross-border spend, massive portfolio
􀂄 Valuation and risks: MasterCard At our PT of $310, MA would trade at ~22x our 2010
EPS, a discount to long-term EPS growth forecast (+24%), implying a PEG of 0.9x,
ongoing discount to PEG used for our PT for V. Our PT is a discount to ranges derived
from our DCF and normalized earnings analysis. Risks: legal, re-weakening in
consumer spending/int’l travel trends, portfolio losses, loss of SEPA-related biz.