Dahlman Rose Expects Upside Surprise for US Steel

In a research report published earlier today, Dahlman Rose is expecting and upside surprise for U.S. Steel Corp. X due to increased production and fixed cost absorption. Dahlman Rose further commented in the report, “Though consensus 1Q12 estimates have recently trended lower (currently at $0.40), we remain confident in our $0.55 estimate, and expect an upside surprise. We have trimmed our expected price realization for the flat-rolled segment in light of recent domestic price declines, but believe that stronger auto shipments (25% of total shipments) will lead to better fixed cost absorption, thereby offsetting spot price declines. We expect capacity utilization at the company's North American facilities to average 85% for the quarter versus 75% last quarter.” Dahlman Rose maintains its Buy rating and $40 PT on U.S. Steel, which closed yesterday at $25.25.