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U.S. Steel: Analysts’ View after Its 2Q17 Earnings Beat

Mohit Oberoi, CFA - Author
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Aug. 18 2020, Updated 5:18 a.m. ET

U.S. Steel’s 2Q17 earnings beat

U.S. Steel (X) released its 2Q17 earnings on July 25 after the markets closed. The company held its earnings call the next day. U.S. Steel posted adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $362 million in 2Q17. It posted adjusted EBITDA of $74 million in 1Q17 and $134 million in 2Q16. U.S. Steel’s 2Q17 EBITDA is the highest quarterly EBITDA since 4Q14. In this part, we’ll see how Wall Street views U.S. Steel after its 2Q17 earnings beat and better-than-expected guidance.

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Analysts’ recommendations

According to consensus estimates compiled by Thomson Reuters, U.S. Steel has a mean one-year price target of $27.42, which represents 20.2% upside over its closing price on August 2. In contrast, the stock carried a one-year target price of $27.23 on July 24—one day before its earnings release.

Some of the analysts revised their ratings on U.S. Steel after its 2Q17 earnings release. On July 27, Cowen raised U.S. Steel’s target price from $21 to $24. On the same day, BMO Capital Markets raised U.S. Steel’s target price from $24 to $29 with a “market perform” rating. Clarksons Platou Securities raised U.S. Steel’s target price from $20 to $27.

On July 28, Citi downgraded U.S. Steel from “neutral” to “sell” and cut its target price from $26 to $20.

Consensus estimates

Overall, U.S. Steel received a “buy” or higher rating from 40% of the analysts polled by Thomson Reuters on August 2, while 14% analysts rated it as a “sell.’ Among other steel companies (CLF), Nucor (NUE) and ArcelorMittal (MT) received a “buy” or higher rating from 80% and 72% of the analysts, respectively.

In the next part, we’ll see how analysts rate AK Steel (AKS) after its 2Q17 earnings beat.

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