Key insights
- Goldman Sachs initiated Buy ratings on Nucor and Commercial Metals, citing sustained higher steel prices due to tariffs and increased demand from infrastructure and construction. Nucor is expected to benefit from its market position, cost advantages, and a transition to free cash flow generation. Commercial Metals is seen as a key player in the US construction industry. This positive outlook on the steel sector could lead to moderate gains in related US equities.
Investing.com -- Goldman Sachs initiated coverage on two U.S. steel equities with Buy ratings, citing sustained higher prices driven by section 232 steel tariffs that have increased import costs and constrained supply.
The bank expects above average demand growth in infrastructure and pockets of growth in private non-residential construction.
Goldman said it favors lower beta companies positioned to accelerate free cash flow and achieve higher through cycle margins through metal margin expansion and product diversification.
Nucor Corp
Goldman Sachs assumed coverage of Nucor Corp. with a Buy rating and a 12-month price target of $210. As the largest steel producer in the United States, Nucor manufactures roughly one quarter of total U.S. steel production.
The company is also the largest recycler of scrap in the US, which provides vertical integration that allows Nucor to maintain higher through cycle margins by controlling costs more effectively than peers.
Goldman Sachs supports its Buy rating with three key factors: Nucor is positioned to outperform the US steel market through rising end market demand, import share gains, and growth-related volume expansion from its West Virginia mill.
The firm also highlights structural cost advantages that should drive margin expansion and a transition from heavy capital investment to a free cash flow harvesting phase.
Nucor provided first-quarter 2026 earnings guidance of $2.70 to $2.80 per diluted share, expecting earnings to increase across all operating segments compared to the fourth quarter of 2025. Analyst actions included a new Sector Weight rating from KeyBanc and a reiterated Buy rating from BofA Securities.
Commercial Metals
Goldman Sachs initiated Commercial Metals coverage also with a Buy rating and a 12-month price target of $74. Commercial Metals is the largest U.S. producer of steel reinforcing bar, making the company essential to the US construction industry.
Goldman Sachs views the company as a leveraged play on non-residential and infrastructure construction, which the firm believes will experience significant growth over the next 12 to 18 months. Through acquisitions of CP&P and Foley, Commercial Metals continues to diversify its product mix as it shifts to a construction solutions company.
Goldman Sachs estimates this segment will increase to more than 25 percent of the company’s segment EBITDA by 2028. The firm expects Commercial Metals will maintain higher through-cycle margins, positioning the company with more upside capture and less margin volatility.
The Buy rating is supported by strong North America end market demand with exposure to US regions with above average growth, inorganic and organic margin expansion, and a strategic focus on prioritizing balance sheet health and cash flow generation.
In recent news, Commercial Metals reported fiscal second-quarter 2026 adjusted earnings of $1.16 per share, which missed analyst forecasts, while its revenue of $2.13 billion exceeded expectations. KeyBanc also reiterated its Sector Weight rating on the company.
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