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The Curious Case of U.S. Steel’s Upgrades and Downgrades

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Upgrades and downgrades

According to the consensus estimates compiled by Thomson Reuters, U.S. Steel (X) carries a consensus one-year price target of $27.70. Based on its September 5 closing price, this represents a 1.7% upside. Out of the 14 analysts covering U.S. Steel on September 5, three have given the stock a “strong buy” rating, while four analysts rate the stock as a “buy.” Five analysts have given the stock a “hold” rating, while the remaining two analysts have a “sell” or lower rating on the stock.

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Divergent views

However, brokerages have quite divergent and strong views about U.S. Steel. In the past, J.P. Morgan and Axiom Capital led the bullish and bearish camps, respectively. J.P. Morgan has been quite bullish on U.S. Steel for the last few quarters. On the other hand, Axiom Capital has been bearish on steel stocks (XME) like Cliffs Natural Resources (CLF) and U.S. Steel.

To be sure, U.S. Steel has kept both bulls and bears interested this year. While the year started off well for the stock, it plunged after its massive 1Q17 earnings miss. Since then, U.S. Steel has been slowly moving up. However, the stock is still trading with year-to-date (or YTD) losses of 17.5%. ArcelorMittal (MT) is trading with YTD gains of 21.6%, while AK Steel (AKS) has lost 43.5% so far this year.

Series overview

We’ve seen divergent views on U.S. Steel recently with the stock getting a downgrade and an upgrade on the same day. In this series, we’ll look at brokerages’ recent views on U.S. Steel. We’ll also see whether the bullish or bearish argument has more substance.

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