AK Steel (NYSE:AKS) 2011 EPS Estimate Slashed Far Below Consensus by UBS (NYSE:UBS)

AK Steel (NYSE:AKS) had its EPS estimates for 2011 slashed by UBS (NYSE:UBS), saying they're a poorly levered play higher carbon steel prices.

UBS said, "We believe AK Steel is not a good levered play to higher carbon steel prices given its predominant fixed-price contract business. Steel price rallies in 2004-06 yielded limited earnings growth. AKS profits shot up in 2007-2008, when the electrical steel market rose to record highs, however pricing has corrected 25-38% from 2008’s peaks and additional global supply can curtail AK’s upside, in our view.

"New high-end supply from Baosteel, Wuhan, NLMK, etc can threaten AK’s high-grade electrical steel share. ThyssenKrupp’s new Ala. sheet mill will take share in high-end auto. We cut 2011e EPS to $0.20 from $0.30 vs consensus $0.54. Higher-cost iron ore and coking coal should flow through 2011 on a lag due to inventory."

UBS downgraded AK Steel (AKS) from "Neutral" to "Sell." AK Steel closed Wednesday at $15.23, losing $0.38, or 2.43 percent. UBS has a price target of $13 on them.