At Wednesday's close, the stock rose 5.6% to $37.18.
Recently, United States Steel (X.US) has received more support on Wall Street.
According to the financial app, BMO analyst Katja Jancic raised his rating for United States Steel from 'hold' to 'buy' and raised his target price from $43 per share to $45 per share, which means that the stock price is expected to rise by nearly 30% from its current level. At Wednesday's close, the stock rose 5.6% to $37.18.
In the past four months, five analysts have upgraded United States Steel's rating to 'buy' or initiated coverage with a 'buy' rating. However, during the period, the company's stock price has fallen by about $10, or 23%.
The main reasons for this situation are potential merger transactions and political factors. Japan's steel company is willing to acquire United States Steel for $55 per share in cash, but the deal has not received support in Washington. At present, United States Steel's stock price is about $20 lower than the transaction price, which means that investors have almost given up on their expectations of the acquisition.
For investors, the key question is how United States Steel's stock price will perform if the currently stalled deal falls through completely. Jancic's answer is $45 per share. She believes that the stock is 'fundamentally undervalued' and points out that United States Steel's investment in micro-steel plant technology is expected to bring higher profits and slightly higher PE ratios.
Micro-steel plants use electrical power to remelt scrap steel, with lower construction and operating costs than traditional blast furnace ironmaking and oxygen converter steelmaking technologies. Newco Company (NUE.US) produces steel using this technology.
Jancic pointed out that United States Steel's current trading price is about five times the company's expected pre-tax depreciation profit in 2025, while peer companies including Newco trade at about 7.5 times the same measure.
Currently, investors seem to be more inclined to watch United States Steel's stock price trend until the dust of the Japan Steel deal settles.
With this rating upgrade, half of the analysts covering United States Steel's stock gave it a 'buy' rating. In contrast, the average 'buy' rating for stocks in the S&P 500 index is about 55%. In addition, the average target price for analysts on United States Steel is also close to $45 per share.