Goldman, JPMorgan Eye 33% Gain in Ternium Steel Stock

Key Takeaway

• Goldman Sachs and JPMorgan project a 27-33% upside for Ternium, citing strong Latin American market performance and an 8% dividend yield.
• Ternium's stock shows promise with analysts' average price target at $50, indicating a potential 22.76% increase from its current $40.74.
• Despite anticipated lower EBITDA in the upcoming quarter, Ternium's strategic presence in key markets like Mexico and Argentina supports optimistic forecasts.

Analysts Bullish on Ternium

Leading financial institutions Goldman Sachs and JPMorgan have expressed optimism about Ternium's potential in the Latin American steel market. Both firms have identified the company's strong performance in key markets such as Mexico and Argentina as pivotal to its recent earnings surpassing expectations. Despite a slight decrease in share value by approximately 5% in 2024, the outlook remains positive. JPMorgan maintains an outperform rating with a $54 price target, suggesting a near 33% upside, while Goldman Sachs holds a buy rating with a $51 target, indicating about a 27% potential increase.

Goldman Sachs has pointed to Ternium's attractive valuation and its 8% dividend yield as key factors in its bullish stance. The firm also sees the expanding business in Mexico as a significant growth driver. This optimism persists even though Ternium's executives have projected lower EBITDA for the upcoming quarter, with Goldman Sachs still expecting the company to meet its annual forecast of $3 billion in EBITDA.

Market Performance and Ratings

Ternium's stock has shown resilience with a recent uptick, trading at $40.74, marking a 1.27% increase. The company enjoys a favorable consensus among analysts, with a mix of strong buy and buy ratings dominating the sentiment. The average price target among analysts stands at $50, suggesting a potential upside of 22.76%, with the highest target at $53 and the lowest at $45.

Morgan Stanley also joins the chorus of positive outlooks, assigning an overweight rating to Ternium with a $47 price target. This target implies nearly a 17% upside from the current trading price, further underscoring the financial community's confidence in Ternium's market position and growth trajectory.

Tailwinds and Challenges

Ternium's strategic operations across Latin America, including in Argentina, Brazil, Columbia, Guatemala, Mexico, and the U.S., position it well to capitalize on regional growth opportunities. The company's performance in Mexico and Argentina has been particularly noteworthy, helping to offset the impacts of lower volume sales overall. However, the company faces the challenge of meeting its EBITDA projections in a quarter where lower earnings are anticipated. The ability to navigate these headwinds while leveraging its strengths in key markets will be crucial for Ternium's continued success.

Street Views

• JPMorgan (Bullish on Ternium):

  "JPMorgan has an outperform rating on Ternium stock, with a $54 per share price target which equates to nearly 33% upside from Monday’s $40.31 close."

• Goldman Sachs (Bullish on Ternium):

  "Goldman Sachs highlighted the company’s attractive valuation and 8% dividend as part of its bullish outlook on the stock, and added that its growing Mexico business is also a tailwind moving forward."

• Morgan Stanley (Bullish on Ternium):

  "Morgan Stanley also has an overweight rating on Terinum stock. The firm’s $47 per share price target amounts to nearly 17% upside moving forward."