Sims Shares Climb as Morningstar Initiates Coverage of Sims, Sets Price Target at AU$15.80

Fri 14 Mar 25, 12:13 AM | Team Kalkine

Shares of Sims Ltd (ASX:SGM), the world’s largest publicly traded metals and electronics recycler, climbed 1.3% to AU$13.98 after Morningstar initiated coverage on the company. The investment research firm assigned Sims a three-star rating out of five and set a price target of AU$15.80, signaling potential upside for the stock.

Despite the positive price target, Morningstar highlighted some risks, assigning Sims a "no-moat" rating, along with high uncertainty and a standard capital allocation rating. The firm expects improved scrap prices and better gross margins in Sims’ North American segment, driven by rising domestic steel demand and reduced competition from imports due to increased U.S. tariffs on steel and aluminum, now at 25%.

While tariffs are currently boosting margins, Morningstar anticipates these trade barriers may ease at the end of the current U.S. administration, potentially leading to a normalization of scrap prices and margins.

Meanwhile, Citi analysts see Toyota Tsusho America’s bid to acquire Sims’ competitor, Radius Recycling, as a favorable development for Sims. The consolidation could reduce market competition, indirectly benefiting Sims' market position. Still, Citi maintains a neutral stance on Sims shares, with a slightly lower price target of AU$15.50.

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