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U.S. Steel: Analysts Disagree on the Effects of Tariffs

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U.S. Steel Corporation

Previously, we looked at AK Steel’s (AKS) ratings and target prices. In this article, we’ll see how analysts are rating U.S. Steel Corporation (X). Of the analysts covering U.S. Steel on April 6, three recommended “strong buy,” six recommended “buy,” and seven recommended “hold” or some equivalent.

The stock has received a mean price target of $48.71, which represents a potential upside of 41.2% based on its April 6 closing price. In comparison, Nucor (NUE) and Cleveland-Cliffs (CLF) are trading 24.2% and 16.6% below their consensus price targets, respectively.

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Steel tariffs

Several analysts have revised U.S. Steel’s target price since mid-February, when the US Commerce Department released its steel probe findings. BMO raised U.S. Steel’s target price from $40 to $50 on February 17, and Credit Suisse raised U.S. Steel’s target price from $48 to $55 in March. According to CNBCMichael Gambardella of JPMorgan Chase said that he expects U.S. Steel to rise to $85 in an “optimistic scenario.”

Bearish analysts

After the tariff announcement, some analysts voiced some caution over U.S. Steel, as described by CNBC. For instance, Timna Tanners of Bank of America Merrill Lynch said that she expects steel tariffs to have “limited benefit” to U.S. Steel’s 2018 earnings. She cited a demand slowdown led by imports of downstream products, possible trade retaliation, and capacity restarts in the United States as bearish drivers for U.S. Steel. Going a step further, Gordon Johnson of Vertical Research, who has held a bearish view on some steel stocks, especially U.S. Steel, said that US steel stocks could be a shorting opportunity after the implementation of the tariffs. So far, bears seem to have won the game, as U.S. Steel and other steel stocks such as ArcelorMittal (MT) have seen selling pressure over the last month. Meanwhile, after the recent wave of sell-offs, some analysts have reiterated their bullish assessments of U.S. Steel, as we’ll explore in the next article.

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