Another analyst has downgraded U.S. Steel stock, which recently hit its lowest point since the import crisis in 2016.
Matthew Miller of New York City-based CFRA Research, downgraded the view on the Pittsburgh-based steelmaker's stock from "buy" to "hold." Miller also cut the 12-month price target for one of Northwest Indiana's largest employers by $3, to $17 a share.
“Although it appears that steel prices may be in the process of bottoming, we do not anticipate a strong recovery," he wrote in a note. "We think recent actions by the U.S. government to lift steel tariffs on Canada and Mexico could lead to a new surge in steel imports into the U.S., at a time when many steel companies are investing in new capacity."
CFRA Research lowered its earnings per share estimate for U.S. Steel, which is publicly traded under the symbol X, by $0.25 to $1.71 this year and by $0.41 to $1.74 in 2020.
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"Operationally, we are impressed with the progress that U.S. Steel is making," Miller wrote. "However, industry fundamentals are less attractive and U.S. Steel is at a disadvantage compared to minimills, given U.S. Steel large level of pension and other post-employment benefits liabilities, which we worry could become a drag on cash flow in upcoming years."
U.S. Steel stock opened at $14.65 a share on Wednesday, down from a recent peak of $45.39 a share in March of last year, when the 25% steel tariffs were anticipated but before they took effect.
The steelmaker's stock has traded for as little as $12.21 a share this year. The company has responded to the deteriorating market conditions by idling three blast furnaces, including one at its flagship Gary Works steel mill.