As previously reported, Longbow analyst Chris Olin downgraded Reliance Steel to Underperform from Neutral, noting that contacts tied to stainless steel are reporting slowing demand across all major product types. Other data points from both his ferrous and nonferrous metal channel checks reconfirmed slowing downstream demand and downward pricing pressure, added Olin, who lowered his 2019 EPS forecast for Reliance by 27c to $8.12. He has a $76 price target on Reliance shares.

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.