The ASX All Ordinaries Index (ASX: XAO) is trading in the green on Wednesday. At the time of writing, the index is 0.051% higher at 9,300.50 points.
The uplift has been driven by ASX All Ords shares like BlueScope Steel Ltd (ASX: BSL). Its share price has already risen 3.49%. At the time of writing, the Australian flat steel producer's share price is changing hands at $23.16 a piece.
The company saw an 11% sell-off of its shares in the second week of October. But the share price has risen 14.2% higher to the time of writing, recovering the losses.
Now, Macquarie Group Ltd (ASX: MQG) have updated investors on their latest stance on the stock.
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The ASX All Ords stock will keep ticking higher
The broker confirmed its outperform rating on BlueScope Steel shares, and has lowered its price target to $25.35. Macquarie analysts had a $25.45 target price on the shares in August. At the time of writing, that represents a potential 9.5% upside over the next 12 months.
"Valuation: We adjust our SOTP-based TP to $25.35ps (from $25.45ps), driven by earnings adjustments," the broker said in its investor note.
"Outperform. Improving Australian demand conditions and support for US price outcomes remain key to the thesis. Management continues to execute well, and the business looks well positioned, as it drives further cost out and makes growth investments."
What else did the broker have to say?
Macquarie noted that US steel prices have ticked up, and Australian residential demand for the metal is improving as interest rates retreat.
"Housing market dynamics are improving as rates recede, with stronger sales, alteration intent and transaction activity. We see this continuing to support BSL's high-value painted and coated sales, a key driver of improving profitability and growth," Macquarie said.
Going forward, Macquarie said it continues to see solid earnings growth over the next three years, supported by a steel price reset in FY26. Volumes and investment-driven growth, along with efficiency gains, are expected to support earnings growth in FY27 and FY28.
"We see 26% compound growth in EBIT off a FY25 base. We also see FCF expansion as we move past peak capex in FY26. Near term, our 1HFY26 EBIT estimate of $551m is at the low end of the $550-620m guide," the broker said.
Macquarie has trimmed its earnings expectations for FY26, FY27, and FY28 by -4.0%, -2.2%, and -2.3%, respectively. The adjustment factors in recent commodity price adjustments and marking to market outcomes for the first half of FY26.
BlueScope Steel is due to host an investor day in New Zealand in late November. The broker expects that BlueScope will reveal that its electric arc furnace (EAF) development at Glenbrook Steelworks will have halved the site's total greenhouse gas emissions and "support the group's cost position".
