BofA Raises Price Target#
BofA Securities has increased its price target for Reliance Steel & Aluminum (NYSE:RS) from $340 to $355, while keeping a Neutral rating on the stock. This adjustment comes after the company reported strong earnings for the first quarter of 2026, exceeding both its own guidance and analysts' expectations.
Strong Q1 Performance#
Reliance Steel's impressive performance was attributed to higher sales volumes, increased pricing, and improved profit margins. However, these gains were somewhat offset by higher costs related to LIFO (Last In, First Out) inventory accounting, which can impact reported earnings. Following the earnings report, Reliance Steel's stock price rose to $350.87, nearing its 52-week high of $365.59, and reflecting a year-to-date increase of 22%. Despite this rise, some analyses suggest that the stock may be overvalued compared to its fair value.
Outlook for Q2 2026#
Looking ahead to the second quarter of 2026, Reliance Steel expects an increase in both shipments and pricing compared to the previous quarter. However, the company anticipates lower profit margins. Notably, Reliance Steel has secured a significant $1.4 billion contract related to border wall construction, which is expected to boost volumes by 3% in Q2, although the margins from this contract may be lower than the company's overall average. Analysts have also revised their earnings estimates upward, indicating a positive outlook for the company.
Analyst Ratings and Recent Developments#
In recent news, Reliance Steel has been awarded substantial government contracts, including a multi-year deal with the U.S. Department of Homeland Security. On the analyst front, KeyBanc has initiated coverage with an Overweight rating and a price target of $341. Conversely, JPMorgan has downgraded the stock to Neutral, citing concerns over margin pressures. BMO Capital has also lowered its rating to Market Perform, adjusting its price target to $320 due to a more cautious outlook on margin recovery. Despite these mixed ratings, Reliance Steel's involvement in defense projects highlights its strategic position in the market.