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U.S. Steel Corporation Looks Strong Even as Big Bulls Cave

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Feb. 8 2019, Updated 8:33 a.m. ET

U.S. Steel’s ratings

U.S. Steel Corporation (X) has received “buy” or higher ratings from five analysts, while the remaining 13 analysts polled by Thomson Reuters on February 6 have rated it as a “hold” or some equivalent.

The stock’s mean consensus price target of $25.13 represents a potential upside of 8.5% over its closing price on February 6.

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Fourth-quarter earnings

U.S. Steel reported its fourth-quarter earnings results on January 30 after the markets closed. The company posted revenue of $3.69 billion in the fourth quarter compared to $3.73 billion in the third quarter and $3.13 billion in the fourth quarter of 2017. U.S. Steel posted an adjusted EBITDA of $535 million in the fourth quarter compared to $526 million in the third quarter and $309 million in the fourth quarter of 2017.

U.S. Steel’s fourth-quarter earnings were lower-than-expected and also fell short of its guidance. Furthermore, U.S. Steel said that it expects its first-quarter adjusted EBITDA to be $225 million, far below analysts’ expectations. Nucor (NUE) and AK Steel (AKS) posted better-than-expected earnings in the fourth quarter.

Read U.S. Steel’s 2019 Guidance: What You Need to Know for a detailed analysis of U.S. Steel’s fourth-quarter earnings and guidance.

Analysts’ recommendations

Some analysts lowered U.S. Steel’s target price following its fourth-quarter earnings release. BMO lowered U.S. Steel’s target price from $26 to $23. JPMorgan Chase, which was overtly bullish on U.S. Steel even as some other brokerages were turning bearish, also took a somber view following U.S. Steel’s earnings, cutting its target price from $65 to $34.

However, despite brokerages’ negative views, U.S. Steel has been strong in 2019, having seen upward price action of 27.0% based on its closing price on February 6.

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