11:57 AM EST, 12/12/2024 (MT Newswires) -- Steel Dynamics' ( STLD ) stock is unlikely to experience significant further gains in the near term due to ongoing weak demand and potential downside risks to Q1 and fiscal-year 2025 earnings projections, UBS Securities said in a report emailed Thursday.

The company has strong organic growth potential, with nearly $1.2 billion in EBITDA from the Sinton steel mill and aluminum mills, and is expected to generate "medium-term cash return," with free cash flow yields of about 10% to 14% by 2026 and 2028, UBS said. "We expect a demand recovery in 2025 (Federal spending) & lower imports, but we think this is partly priced in already when significant uncertainty still remains," it added.

Steel Dynamics' ( STLD ) organic growth and "cash return potential" remain strong, with Sinton expected to reach $475 million to $525 million EBITDA at full capacity by 2025, UBS said.

"US steel shares moved higher into the US election result, on expectations of stronger trade protection and tax cuts," but the company's 2025 EBITDA estimates fell 4% due to weak Q3 results and soft demand.

UBS believes that the company's stock will likely "consolidate" in the near term, the report said.

UBS downgraded Steel Dynamics ( STLD ) to neutral from buy and raised its price target to $149 from $145.

Shares of Steel Dynamics ( STLD ) were down 4.3% in recent Thursday trading.

Price: 127.68, Change: -5.87, Percent Change: -4.40