Market Overview

UPDATE: J.P. Morgan Downgrades US Steel to Neutral, Lowers PT

Share:
Related X
Jon Najarian Sees Unusual Options Activity In Alerian MLP And US Steel
Mid-Morning Market Update: Markets Open Lower; Target Profit Beats Estimates
Nepsis Capital Management, Inc. Buys Validus Holdings, Oracle Corp, Rio Tinto PLC, Sells ... (GuruFocus)

In a report published Monday, J.P. Morgan & Co. downgraded its rating on United States Steel Corporation (NYSE: X) from Overweight to Neutral, and lowered its price target from $43.00 to $29.00.

J.P. Morgan noted, “We rate shares of U.S. Steel Neutral with a $29 December 2013 price target. U.S. Steel is clearly the most levered domestic stock to a steel recovery given its higher fixed costs from its backward integration into iron ore. As a result, X's stock price tends to outperform during periods of high raw material price inflation - something we are not forecasting in the near term. Additionally, the increasing frequency of steel price ‘mini-cycles' and recently lowered projections for key raw material prices do not provide the optimum environment for U.S. Steel to fully display its historical earnings leverage. Moreover, we continue to see headwinds in Tubular margins with increasing supply and stagnating rig counts while the pace of USSE's turnaround remains largely tied to the broader economic climate in the region. As a result, we favor steel mills such as Nucor and Steel Dynamics with more exposure to an eventual construction recovery, less levered balance sheets, and greater operating flexibility to navigate future steel mini-cycles.”

United States Steel Corporation closed on Friday at $22.35.

Latest Ratings for X

DateFirmActionFromTo
Nov 2017BMO CapitalMaintainsMarket Perform
Nov 2017Cowen & Co.UpgradesUnderperformMarket Perform
Oct 2017Bank of AmericaMaintainsBuy

View More Analyst Ratings for X
View the Latest Analyst Ratings

Posted-In: J.P. Morgan & Co.Analyst Color Downgrades Analyst Ratings

 

Related Articles (X)

View Comments and Join the Discussion!

Partner Center