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After U.S. Steel Corp. (NYSE: X) reported awful numbers, it seems that it is now Nucor Corp.’s (NYSE: NUE) turn. According to one key analyst, this weakness might be only pronounced in the short term but investors should be cautious around the Nucor and the steel industry.

According to Merrill Lynch, disappointing second-quarter guidance reflects slow nonresidential growth. Nucor said that it expects to see earnings per share (EPS) in the range of $1.00 to $1.05, versus the consensus estimate of $1.22, citing disappointing nonresidential growth and sheet pressure.

Merrill Lynch has a Buy rating for Nucor with an unchanged $73 price objective. The firm also said that Nucor remains a favored play on a solid steel price outlook and continued construction recovery.

The brokerage firm ultimately trimmed its second-quarter estimates for Nucor to $1.10 in EPS from $1.22 and the 2017 full year EPS to $4.25 from $4.45, versus the consensus of $4.38. Merrill Lynch further commented:

Nucor has had a tradition of conservatism. While we left volumes unchanged, we assumed narrower sheet and bar profits on the competition comments and recent sheet price erosion. We were surprised by the comments on weaker non-res construction growth than expected, given positive commentary from building materials peers.

Finally, Merrill Lynch closed the report with its investment rationale:

We rate Nucor shares Buy in light of conviction around rising steel prices in 2017E. Nucor remains relatively defensive because of its variable costs and LIFO earnings, which can help offset the hit from expected lower steel prices ahead. We still see a solid free cash flow outlook and strong balance sheet, and note Nucor’s exposure to recovering non-residential construction.

Shares of U.S. Steel were trading down 3.8% at $19.89 on Thursday, with a consensus analyst price target of $27.23 and a 52-week range of $14.80 to $41.63.

Nucor shares were down 5.3% at $55.96. The stock has a 52-week range of $44.81 to $68.00.