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Axiom Capital Sees Challenges Ahead For United States Steel Corporation

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In a report published Tuesday, Axiom Capital analyst Gordon L. Johnson II reiterated a Sell rating and $21.00 price target on United States Steel Corporation (NYSE: X).

In the report, Axiom Capital noted, “While we believe many pundits see $1/shr in quarterly earnings for X as sustainable (or $4/yr in annual earnings × a 10x P/E multiple, justifying today's ~$40/shr stock price), should HRC prices fall back below $620/s. ton, we believe X would once again be at/below break-even on the bottom line; more specifically, with: (a.) inventories spiking (MSCI + steel mill inventories), (b.) scrap prices plummeting recently (increasing the competitiveness of the mini mills), (c.) imports into the U.S. rising to near all-time record levels, exacerbated by (d.) the increasingly bleak prospect of a U.S. trade case against foreign HRC producers (driving HRC imports higher), as well as our discussions w/ industry experts during our attendance at the 9/18 American Steel Distributors (ASD) meeting, we see HRC spot prices falling back to ~$620/s. ton by year-end ‘14; resultantly, we see X as among the better shorts in our metals & mining universe on the aforementioned trends.”

United States Steel Corporation closed on Monday at $40.63.

Latest Ratings for X

DateFirmActionFromTo
Nov 2019MaintainsBuy
Nov 2019DowngradesBuyHold
Oct 2019DowngradesBuyHold

View More Analyst Ratings for X
View the Latest Analyst Ratings

Posted-In: axiom capital Gordon L. Johnson IIAnalyst Color Reiteration Analyst Ratings

 

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