Tenaris (NYSE:TS) stock rose 3.27% (As on July 8, 12:40:01 AM UTC-4, Source: Google Finance) after Jefferies Financial Group upgraded the stock from Hold to Buy and raised its price target from $35.70 to $46. Jefferies improved its judgment as it is expecting a continuation of the recovery in demand of pipes for the oil sector, especially in the United States, both in the rest of 2022 and in 2023, when free cash flow will reach record levels for at least 15 years. “Energy remains the strongest end market for steel,” says the broker, who expects the group’s EBITDA to be 15% higher than consensus by 2023.

Meanwhile, the company has entered into a definitive agreement to acquire from Benteler North America Corporation, a Benteler group company, 100% of the shares of Benteler Steel & Tube Manufacturing Corporation for an aggregate price of US$460 million, on a cash-free, debt-free basis. The acquisition will include US$52 million of working capital. The transaction is subject to regulatory approvals, including approval by the U.S. antitrust authorities, consent by Louisiana Economic Development and other local entities, and other customary conditions. Closing is expected to occur during the fourth quarter of 2022.

Moreover, the company’s sales in the first quarter increased a further 15% sequentially, driven by higher prices for OCTG in the Americas and higher shipments of line pipe in Europe and South America. The EBITDA rose 30% sequentially with the margin exceeding 26%, as higher prices more than compensated increases in energy and raw material costs. The company has decided to discontinue the industrial equipments business in Brazil which recorded an EBITDA loss of $14 million, including severance provisions, during the quarter, and the company fully impaired the value of 49% shehare in the joint venture with Severstal in Russia, recording a charge of $15 million.

Working capital increased by $609 million in the quarter, with higher receivables, reflecting an increase in sales, and higher inventories which were affected by higher costs for raw material and energy. Operating working capital days amounted to 141, which compares with 165 in the first quarter of 2021 and 135 in the fourth quarter of 2021. Free cash flow was negative at $94 million and the company ended the quarter with a net cash position of $562 million.