BofA/Merrill Lynch Upgrades US Steel (X) to Buy

February 1, 2017 5:37 PM EST
Get Alerts X Hot Sheet
Price: $25.87 --0%

Rating Summary:
    9 Buy, 16 Hold, 5 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 13 | Down: 22 | New: 8
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(Updated - February 1, 2017 5:41 PM EST)

BofA/Merrill Lynch upgraded US Steel (NYSE: X) from Neutral to Buy with a PT of $40.

The analyst comments "Upgrading to Buy on stock pullback and better outlook. We upgrade U.S. Steel to Buy as we incorporate its $1.3B 2017E EBITDA guidance, up from our prior $1.1B and $1.2B consensus, and believe it provides attractive leverage to strong steel prices after a recent pullback. Management gave us confidence that further OCTG recovery upside was not incorporated in its guidance, and spoke positively about business conditions. Flowing through better-than-expected Q4 volumes and lighter met coal cost pressure than we expected ($19/t y/y vs our $30) drove our estimates up. We model average benchmark hot rolled coil (HRC) at $650/t for 2017E, and anticipate U.S. sheet volume up a modest 2% y/y as we expect domestic mills take share from imports. While we had been concerned over higher costs, we think U.S. Steel’s cost pressures are now known, and the pullback in shares provides an attractive entry point, in our view."

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 $32.71 yesterday.



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