BMO Capital Downgrades Algoma Steel (ASTL) to Market Perform, Cuts PT to C$8

On Monday, BMO Capital downgraded Algoma Steel Group Inc. (NASDAQ:ASTL) to Market Perform from Outperform, while simultaneously lowering its price target to C$8 from C$12. This revision follows the recent announcement that Section 232 steel tariffs will double to 50%, which would significantly impact Algoma’s near-term outlook due to its substantial exposure to the US market.

Algoma’s Q1 2025 financial results revealed a challenging period. The company’s net sales realization decreased to $986 per ton from $1,260 per ton year-over-year, which contributed to an 18.5% year-over-year decline in steel revenue to $463 million. Algoma’s overall quarterly revenue fell 39.27% to generate $373.70 million. The company particularly incurred $10.5 million in tariff costs in Q1 due to a 25% tariff on outbound steel shipments to the US.

However, Algoma shipped 470,000 tons in the quarter, which was a 4.2% increase year-over-year, and saw plate shipments rise to ~91,000 tons. Algoma is also making progress on its transformative Electric Arc Furnace/EAF project, with first steel production expected in Q2, and no material changes to project costs or production expectations. This EAF transition aims to improve the cost structure and environmental footprint.

Algoma Steel Group Inc. produces and sells steel products in Canada, the US, and internationally.

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This article is originally published at Insider Monkey.