Schnitzer Steel upgraded to "neutral"

10/30/07 - D.A. Davidson & Co.

NEW YORK, October 30 (newratings.com) - Analysts at DA Davidson upgrade Schnitzer Steel Inc (SCHN) from "underperform" to "neutral," while raising their estimates for the company. The 12-18 month target price is set to $65.

In a research note published yesterday, the analysts mention that the company has posted its F4Q EPS short of the estimates. Rising costs exerted pressure on Schnitzer Steel’s margins for both scrap and steel, the analysts say. The company faces both organic and acquisition-related expansion opportunities in the scrap business, DA Davidson adds. The company's long-term prospects are expected to improve through volume expansion, according to the analysts. The EPS estimate for FY08 has been raised from $3.90 to $4.10.