Nucor Was Just Upgraded to Buy by UBS With $190 Price Target

UBS analyst Andrew Jones upgraded Nucor Corp (NYSE:NUE | NUE Price Prediction) to Buy from Neutral on Thursday, raising his price target to $190 from $184, arguing that a recent pullback has created a compelling entry point. The firm believes U.S. steel producers are “largely insulated” from the Iran conflict and likes Nucor’s setup given little direct hit from energy and project growth in a federally supported higher price/volume environment.

The stock, currently trading at $166.45, has lost 5.22% over the past month and is down 1.74% year-to-date, though it remains up nearly 31% over the past year.

The Correction Case

Nucor shares have pulled back 7.65% over the past month, sitting at $165.17 as of Wednesday’s close — 17.35% below their 52-week peak of $196.90. The slide traces back to a disappointing Q4 2025 report, where adjusted EPS of $1.73 missed the $2.14 consensus by roughly 19%, weighed down by an 8% sequential drop in steel mill shipments, utilization slipping to 82% from 85% in Q3, and scheduled outages at DRI facilities.

UBS sees that weakness as cyclical rather than structural. The forward picture is meaningfully brighter: management guided Q1 2026 EPS to $2.70–$2.80, with improvement expected across all three segments. CEO Leon Topalian noted on the earnings call that “sheet prices began to rise in November and December, with most of that benefit expected to be realized in the first quarter.”

Why the Setup Is Attractive

Several structural tailwinds support the upgrade thesis. Steel import market share has fallen sharply, from approximately 25% a year ago to an estimated 14% in November 2025, as Section 232 tariffs take hold. Backlogs entering 2026 are nearly 40% higher year-over-year in the steel mills segment, with plate backlogs up 40% and rebar at record levels. Management projects full-year 2026 steel mill shipments to rise approximately 5% versus 2025, driven by data centers, energy infrastructure, and advanced manufacturing.

Capital spending is also shifting from investment mode to harvest mode. After generating negative free cash flow of -$188 million in 2025 during a heavy build cycle, Nucor is guiding 2026 capex down to approximately $2.5 billion from $3.4 billion in 2025. CFO Steve Laxton cited an incremental EBITDA contribution of around $500 million from recently completed projects alone, pointing to meaningfully higher free cash flow ahead.

What Investors Should Watch

At a forward P/E of 13.3x and with 11 Buy ratings and zero Sells among covering analysts, the Street broadly agrees with UBS’s constructive view. Nucor has raised its dividend for 53 consecutive years, providing income stability while the earnings recovery plays out. The West Virginia sheet mill, targeted for late 2026 completion, represents the next major capacity milestone to monitor. Near-term risks include softness in automotive and residential construction, where Topalian acknowledged “we have yet to see much improvement from interest rate-sensitive markets.”