US Steel Corp (X): Channel Checks Imply Profit Upside - Rosenblatt

Rosenblatt Securities analyst, Chris Olin, preformed a series of channel checks that indicate US Steel (NYSE: X) is on-track to generate $500-525 million of total EBITDA in 2016. We expect the management team to increase the full-year target by $100-125 million considering: (1) the continued strength in domestic carbon sheet pricing; (2) anticipated cost savings from Carnegie Way; and (3) new evidence of slowly improving trends in the Tubular markets.

The increased 2017 EPS forecast by $0.46 (to $0.30) to anticipate favorable annual steel contract adjustments (50% of total Domestic Steel volumes) and curbed losses for the Tubular Segment. Despite the global market uncertainties, spot market prices for hot rolled coil are holding in the $600-625 per ton range (+25% over the past six months) and the 2H downside appears to be limited as import supply has been constrained (through trade case support).

No change to Buy rating or $25 PT.

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 $14.28 yesterday.

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