Morningstar initiates coverage on Australia's Sims with 'high uncertainty' rating

Toyota Tsusho

13/03/2025 23:42

Adds Citi comments, share price moves

** Shares of Australia's Sims SGM.AX rise 1.3% to A$13.98

** Morningstar initiates coverage on the world's largest publicly traded metals and electronics recycler

** Investment research firm sets price target at A$15.80, rates stock three stars out of five

** "We assign Sims no-moat, high uncertainty, and standard capital allocation ratings" — Morningstar

** Expect higher scrap prices and better gross margins for its North American segment, reflecting increasing demand for domestic steel and reduced competition from imported steel

** U.S. duty rate on steel, aluminium has risen to 25%

** Morningstar, however, expects tariffs to diminish at the end of the current administration, resulting in a normalisation of scrap prices and margins

** Citi sees Toyota Tsusho America's offer to buy co's competitor Radius Recycling as a positive development for Sims

** Citi "neutral" on shares, PT set at A$15.50

** 1 of 12 analysts rate the stock "buy", 8 "hold" and 3 "sell" or lower; their median PT is A$14.65 – according to data compiled by LSEG

** Shares flat at A$13.8 as of last close

 (Reporting by Nichiket Sunil in Bengaluru)

 ((Nichiket.Sunil@thomsonreuters.com))