Stifel GMP on Monday reiterated its buy rating on the shares of Algoma Steel Group (ASTL.TO) while trimming its price target to C$21.00 from C$22.00 on weak steel prices.

"This is a value-centric idea. After a 29% (S&P 500: -2.4%) draw down in Algoma's share price from the recent high on November 7, 2024, we are reiterating our positive thesis on the stock. The near-term outlook is certainly worse given continued weak steel prices into 1Q25E, but the key underpinnings of our thesis remain unchanged. The EAF (electric-arc furnace) transition is progressing as planned with hot metal expected by the end of 1Q25E. Meanwhile, we believe Algoma remains an attractive takeout candidate given that it trades at a 2.0x EV/EBITDA discount to peers and a 65% discount compared to new build steel plant costs. We have lowered our target price to $21/sh from $22/sh, but maintain our BUY rating. We think the stock could potentially be a double from here," analyst Ian Gillies noted..

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