Under-priced Exposure to Rising North American Steel Profitability

Goldman Sachs reiterates a Buy rating on Ternium (TX) and raises the price target to $57, citing the stock's significant valuation discount relative to North American peers and an improving Mexican price environment driven by new tariffs.

Key Takeaways

• 1.Ternium offers a 42% valuation discount compared to US steel peers while providing equivalent exposure to North American profitability.
• 2.Mexico's implementation of steel tariffs (10-50%) is successfully driving a recovery in domestic steel prices, which have risen 22% YTD.
• 3.Free Cash Flow (FCF) conversion is expected to improve significantly after 2026 as major growth capex (Pesqueria project) concludes.

Table of Contents

• A recap on Mexican steel trade protection measures
• Estimate Changes
• Valuation and Key risks
• Disclosure Appendix

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