Why KeyBanc Upgraded Nucor After a 10% Slide

Nucor shares dropped 10% over six trading days through June 24. KeyBanc chose that point to upgrade the stock to Overweight from Sector Weight, with a $274 target.

Analyst Samuel McKinney said steel buyers still face tight supply because the spot market is "virtually non-existent" and contract allocations remain limited. KeyBanc expects real carbon steel demand to grow 2% year over year in 2026, while finished steel imports are projected to fall 15% from 2025 levels. The firm believes the tight domestic supply situation will support hot-rolled coil pricing through September. McKinney called the shares "compelling" at the post-selloff price.

Morgan Stanley raised its Nucor price target to $258 from $227 on June 22, keeping an Equal Weight rating. The firm increased its steel price forecasts to reflect what it sees as an extended supply-driven rally. Analyst Carlos De Alba noted that Commercial Metals remains Morgan Stanley's only Overweight-rated steel stock in North America, arguing that concerns about new rebar supply are overdone in CMC's share price.

The divergence between the two banks matters. KeyBanc sees the recent pullback as an entry point, betting that the physical market will override valuation concerns. Morgan Stanley's upgrade is more cautious: it lifted the target but kept the rating at Equal Weight, suggesting the rally in steel stocks has already priced in the run-up in HRC prices.

Nucor's NUE stock page shows a Mixed Alpha Score of 45. The stock sits in a sector that both banks see as supply-constrained but unevenly valued. The confirmation for KeyBanc's call is whether HRC prices hold at current levels through the third quarter. The risk is that import volumes recover faster than expected or that end-market demand softens in the second half.

The next scheduled catalyst is Nucor's second-quarter earnings, due in late July.