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How Do Analysts Rate U.S. Steel after Its 4Q16 Earnings Beat?

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Feb. 13 2017, Updated 7:35 a.m. ET

Analysts’ ratings

According to consensus estimates compiled by Thomson Reuters, U.S. Steel (X) has a mean one-year price target of $34.13, which is similar to its closing price on January 7, 2017. In contrast, U.S. Steel carried a one-year price target of $33.47 on January 30, one day before its earnings release.

Of the 18 analysts surveyed by Thomson Reuters, seven recommended U.S. Steel stock as a “buy” or equivalent, while three recommended a “sell” or equivalent on the stock. Almost 45% of analysts recommended a “hold” on the stock. In contrast, Steel Dynamics (STLD) only has “buy” and “hold” ratings. AK Steel (AKS) has the most “hold” recommendations in our coverage of steel stocks (XME) (MT).

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Analysts’ actions

Some of the Wall Street analysts have raised U.S. Steel’s target price after the company’s 4Q16 earnings release. For example, J.P. Morgan raised U.S. Steel’s one-year price target from $37 to $39. Bank of America also raised its rating on U.S. Steel from “neutral” to “buy.”

However, the most noteworthy action has been the upgrade by Argus, which had downgraded the stock just two months ago. Axiom Capital is still the most bearish brokerage on U.S. Steel.

4Q16 earnings

U.S. Steel released its 4Q16 financial results on January 31 after the market closed, and it held its earnings conference call on February 1. The company reported adjusted net income of $47 million, which translates into adjusted EPS (earnings per share) of $0.27. To put this in context, U.S. Steel generated adjusted EPS of $0.40 in 3Q16 and an adjusted loss of $0.23 per share in 4Q15.

U.S. Steel managed to beat its 4Q16 EPS estimates by a decent margin. Along with the earnings beat, the company’s upbeat 2017 outlook also seems to have impressed analysts. We’ll discuss this more in the next article.

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