KeyBanc analysts have raised their price target on Worthington Steel Inc (NYSE:WS) from $41 to $47, reaffirming an Overweight rating on the stock this past Friday. The shares, which are currently trading at approximately $40.17, have gained considerable momentum over the last year, appreciating nearly 37% and edging closer to their 52-week peak of $44.
This upward revision comes on the back of Worthington Steel’s announcement regarding its definitive agreement to acquire Klöckner & Co. (XETR:KCO). The transaction is anticipated to conclude in the second half of 2026, marking a significant strategic expansion for Worthington.
KeyBanc’s assessment recognizes that the acquisition will result in an increase in net debt before Worthington progresses with deleveraging maneuvers. However, the brokerage firm argues that this move aligns well with the interests of aggressive small-cap growth investors who are likely to focus on Worthington Steel’s enhanced long-term earnings potential that the Klöckner deal unlocks. Current data from InvestingPro shows that Worthington Steel operates with moderate debt levels and possesses cash flows adequate to cover interest expenses, factors that could help buffer the financial implications of the acquisition.
The broker’s revised price target is grounded in expectations for fiscal year 2027 earnings per share ranging between $3.50 and $4.00, contingent upon a late calendar year closure of the merger. Additionally, KeyBanc underscored the company’s broader earnings potential post-deal, estimating a range of $4.50 to $7.00 per share depending on execution efficiency and prevailing macroeconomic conditions.
In the recent quarterly results for Q2 fiscal 2025, Worthington Steel reported net sales reaching $871.9 million, surpassing predictions of $802 million. Earnings per share registered at $0.38, slightly below the anticipated $0.39. Concurrently, Worthington reiterated its all-cash acquisition offer for Klöckner & Co, proposing €11 per share for all outstanding shares, valuing Klöckner at roughly $2.4 billion on an enterprise value basis. The deal significantly premiums Klöckner’s historical valuation multiples and, once complete, will establish Worthington Steel as the second largest steel service center in North America with combined revenues exceeding $9.5 billion.
These initiatives have attracted notable attention from investors and industry analysts who highlight the strategic merits of the acquisition in reinforcing Worthington’s market position and revenue scale.