JPMorgan Resumes US Steel (X) at Neutral

JPMorgan analyst Bill Peterson resumes coverage on US Steel (NYSE: X) with a Neutral rating and a price target of $52.00.

The analyst comments "Following a period of restriction, we are moving to a Neutral rating and a December 2024 price target of $52 (Neutral rating and December 2023 price target of $26 prior to restriction) from a Not Rated designation. Our rating reflects a view that there is an ~80% probably Nippon Steel Corporation’s (NSC) $55/share bid for US Steel will go through despite recent political rhetoric. Should the deal not go through, we think there is downside risk in shares closer to $41 based on a 5.5x multiple, still a slight premium to X’s historical average, as we see greater valuation support given rerating potential for the industry as a whole. As we think about the year ahead, we see likelihood for a positive FCF inflection on easing capex requirements and BRS2 coming online in the back half of the year. While we like BRS2 being on time and budget, we still view the ramp as a ‘show-me-story’ with risk to the downside on guided ~$100M incremental EBITDA contribution amid likely start-up costs. Meanwhile, tubing can find stability with destocking largely complete while its new NGOES line ramping is a plus, although the backdrop in Europe remains challenging."

For an analyst ratings summary and ratings history on US Steel click here. For more ratings news on US Steel click here.

Shares of US Steel closed at $46.36 yesterday.

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