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Fly News Breaks for January 29, 2020
Jan 29, 2020 | 06:56 EDT
Deutsche Bank analyst Chris Terry downgraded Nucor to Sell from Hold with a price target of $45, down from $54. While Nucor on its Q4 earnings call provided supportive commentary for 2020 on end markets, the key new item was capital expenditures in 2020 and 2021, Terry tells investors in a research note. In aggregate, the capex is ~$1B higher than the analyst's numbers over the two-year timeframe. The company's free cash flow is negative $67M in 2020 and with its minimum/progressive dividend of $486M expected in 2020, Nucor will have to fund the dividend out of the cash balance and/or possibly debt, Terry contends. He expects pressure on the share price as the market adjusts to lower cash flow.