Credit Suisse Starts US Steel (X) at Outperform

Credit Suisse initiates coverage on US Steel (NYSE: X) with a Outperform rating and a price target of $19.00.

Analyst Curt Woodworth commented, "In our view, US Steel will emerge from the current cycle with a significantly leaner footprint and greater concentration into the automotive and OEM channels. Severe market weakness in 2015 masked the significant cost reductions achieved at X over the past several years, and we expect X to achieve very high incremental margins near 40-50% once market volumes recover, which should become evident by 2Q-16."

He added, "US value add sheet spot prices are up almost $100/ton off lows and lead times continue to move out. US Steel has the highest operating leverage to a recovery with ~65% of US volume tied to spot. On the spot volume, every $25/ton increase in ASP equates to ~$1.20 of annual EPS and $200mm of EBITDA. Every $200mm of net project Carnegie gains is ~$1.00 of annual EPS impact."

For an analyst ratings summary and ratings history on US Steel click here. For more ratings news on US Steel click here.

Shares of US Steel closed at $12.53 yesterday.

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