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U.S. Steel Corporation: Bulls and Bears Clash after Steel Tariffs


Mar. 19 2018, Published 3:56 p.m. ET

U.S. Steel

U.S. Steel Corporation (X) received a “strong buy” rating from two analysts, while six analysts gave the stock a “buy” rating. The remaining seven analysts polled by Thomson Reuters on March 16 gave the stock a “hold” or equivalent rating. None of the analysts gave U.S. Steel a “sell” or lower rating.

The stock carries a mean consensus target price of $47.62, which represents a 19.1% upside over its closing price on March 16. In contrast, U.S. Steel carried a target price of $43.46 on February 15—one day before the Section 232 probe findings were released. Several analysts raised U.S. Steel’s target price after the U.S. Department of Commerce released its Section 232 recommendations.

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Analysts’ action

BMO raised U.S. Steel’s target price from $40.00 to $50.00 on February 17. The brokerage also raised its target prices for Nucor (NUE), AK Steel (AKS), and Steel Dynamics (STLD)

In March, Credit Suisse (CS) raised U.S. Steel’s target price from $48.00 to $55.00. Michael Gambardella of J.P. Morgan (JPM), who has been leading the bullish camp for U.S. Steel for quite some time, expects the steel giant to rise to $85.00 under an “optimistic scenario.”

However, not all analysts are convinced that these tariffs would be beneficial for the US steel industry. Timna Tanners of Bank of America Merrill Lynch expects the steel tariffs to have “limited benefit” to U.S. Steel’s 2018 earnings. She cites possible trade retaliation, capacity restarts in the United States, and a demand slowdown led by imports of downstream products as bearish drivers for U.S. Steel. 

Gordon Johnson of Vertical Research, who has held a bearish view on stocks like Cleveland-Cliffs (CLF), believes US steel stocks could be a shorting opportunity after the implementation of President Trump’s tariffs.

In the next article, we’ll look at some of U.S. Steel’s bullish and bearish drivers.


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