Goldman Sachs Downgrades US Steel (X) to Neutral

Goldman Sachs downgraded US Steel (NYSE: X) from Buy to Neutral with a price target of $23.00 (from $52.00). Analyst Sal Tharani noted concerns over its integration into iron ore and high exposure to the OCTG market.

"We lower our estimates to reflect deteriorating market conditions within the energy end market and declining global and domestic steel prices. While the key element of our initial constructive thesis on the US flat rolled market, which hinged around a higher US pricing premium over global prices, has upheld, ultimately, our bullish stance has come under pressure as absolute global steel prices have weakened due to cost push from deteriorating raw material prices, USD appreciation, and declining demand in the energy sector," said Tharani.

"One of the major concerns for steel surrounds capex, where our oil services team expects a 30% cut in US E&P capex versus prior expectations of 15%. Additionally, the team expects coiled tubing, directional drilling, casing, tubing services and OCTG to experience 20%-25% price decreases and highly consolidated businesses such as drilling bits and drilling fluids to see a 10% cut," he added.

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 $22.71 yesterday.

You May Also Be Interested In

• HSBC Downgrades Feng Tay Enterprises (9910:TT) to Hold
• Prysmian SpA (PRY:IM) (PRYMY) PT Raised to EUR53 at HSBC
• QuantumScape (QS) PT Lowered to $6 at Truist Securities