Jefferies analyst Seth Rosenfeld upgraded Reliance Steel & Aluminum to Buy and raised his price target for the shares to $103 from $95. While U.S. steel price momentum is "likely to fade," Reliance's track record of "best-in-class" margin performance should continue to drive "robust" earnings and free cash flow generation in the quarters ahead, Rosenfeld tells investors in a research note. The analyst believes elevated steel prices should continue to benefit the company's sales into 2019 and thinks consensus estimates underestimate its margin potential.

Reliance expects a better than normal seasonal recovery in demand in the second quarter of 2024 despite prevailing macroeconomic uncertainty and geopolitical matters. Accordingly, the company estimates its tons sold will be up 2.5% to 4.5% in the second quarter of 2024 compared to the first quarter of 2024, with approximately 2% of the sequential growth coming from recently completed acquisitions on April 1, 2024. In addition, Reliance expects its average selling price per ton sold for the second quarter of 2024 to be down 1% to 3% compared to the first quarter of 2024. The company also anticipates short term gross profit margin pressure in the second quarter of 2024 as it works through higher cost inventory on hand. Based on these expectations, the company anticipates non-GAAP earnings per diluted share in the range of $4.70 to $4.90 for the second quarter of 2024.