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Bulls or Bears: Who Makes the Best Case for U.S. Steel?

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U.S. Steel bulls and bears

According to consensus estimates compiled by Bloomberg, U.S. Steel has a one-year price target of $20.07—an 8.6% upside compared to its closing price on October 19. Of the 18 analysts surveyed by Bloomberg, five analysts rate the stock as a “buy” and an equal number rate it as a “sell.” The remaining analysts rate the stock as a “hold.”

The bulls and bears have shared honors in their bid to get control over U.S. Steel. However, the bulls have had the upper hand so far. It’s reflected in U.S. Steel’s 131% YTD (year-to-date) returns. AK Steel (AKS) has risen 115% YTD, while Nucor (NUE) and Steel Dynamics (STLD) gained 19% and 41%, respectively, so far in 2016.

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Series overview

However, there’s a lot of divergence in analysts’ opinions about U.S. Steel. Rosenblatt Securities and J.P. Morgan are among the most bullish brokerages on U.S. Steel with respective target prices of $32 and $31. Macquarie and Axiom Capital are placing bearish bets on U.S. Steel. They set target prices of $13 and $14, respectively. Notably, not many companies have such a big dispersion in the target prices. We should note that the divergence in analysts’ opinions is a reflection of the industry outlook as well as U.S. Steel’s relative position in the steel industry (XME).

In this series, we’ll look at U.S. Steel’s bullish and bearish drivers. It will help us understand how the stock could play out in the coming months.

Let’s start by looking at the bullish argument for U.S. Steel.

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