Could the BlueScope (ASX:BSL) share price hit $27 by the end of 2021?

Is this steel maker a share to buy?

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In afternoon trade, the BlueScope Steel Limited (ASX: BSL) share price is trading lower.

At the time of writing, the steel producer's shares are down 1% to $21.26.

Not that longer term shareholders will be too fazed. The BlueScope share price is still up 21% year to date.

Could the BlueScope share price rise to $27.00 by the end of the year?

Despite the impressive gain by the BlueScope share price this year, one leading broker still believes it can go a lot higher.

According to a note out of Citi this week, its analysts have retained their buy rating and $27.50 price target on the company's shares. In addition, the broker is forecasting an unfranked 50 cents per share dividend in FY 2022.

Based on the current BlueScope share price, this implies a potential return of 29% before dividends and over 31% including them.

In light of this, it appears as though the team at Citi see scope for BlueScope's shares to be trading around the $27.00 mark come the end of the year.

What did the broker say?

Citi is bullish on the BlueScope share price due to its belief that the company will deliver a very strong profit result (>100% increase in net profit) in FY 2022. It also notes that the company has recently upgraded its guidance to reflect a stronger than expected performance.

The broker commented: "We update our model following revised guidance from BSL. The company now expects 1H FY2022 EBIT to be in the range of $2.1 to $2.3b (previous guidance $1.8-2.0b). Subsequently we raise our 1H FY22 EBIT est. to $2.24b (previously $1.91b). Key driver behind new guidance is strong North Star HRC spreads, better ASP volumes and strong momentum in NA coated products business. BSL will provide more detail on trading conditions at its 2021 AGM (scheduled for 18 November). We maintain our Buy call and A$27.50/shr target price."

All in all, this could make BlueScope one to watch in the coming months.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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