Zinger Key Points
- Biden blocks NSC's $55-per-share bid for US Steel, citing national security and supply chain concerns.
- US Steel faces bearish momentum but retains long-term growth potential through Big River Steel and new products.
United States Steel Corp X is caught in a whirlwind of challenges. From technical bearish signals to a major acquisition roadblock, the stock is under pressure.
Yet, analysts believe opportunities may still exist for investors willing to ride out the storm.
Bearish Signals Dominate X Stock Charts
US Steel's stock performance has been disappointing, with a 36.74% decline over the past year, compounded by 22.76% and 19.64% drops in six months and the past month, respectively.
Chart created using Benzinga Pro
Key technical indicators suggest bearish momentum is strong. The stock price of $30.48 is below its eight, 20, 50 and 200-day simple moving averages, with the MACD indicator at a negative 1.63 reinforcing a negative outlook.
Biden Blocks NSC's $55-Per-Share Bid
In a dramatic twist, President Joe Biden officially blocked Nippon Steel Corp's NISTF NPSCY $55-per-share bid for US Steel, citing national security and supply chain concerns. This decision ends the 382-day acquisition saga, leaving both US Steel and NSC reeling.
JPMorgan analyst Bill Peterson expects a sharp decline in the stock, potentially into the high $20s. However, he remains constructive, with a valuation outlook above $40, emphasizing US Steel’s growth prospects.
What Lies Ahead?
Peterson outlines two potential paths for US Steel. The company could remain a standalone entity, focusing on its Big River Steel operations and transitioning legacy blast furnace assets.
Alternatively, domestic players like Cleveland-Cliffs Inc CLF may bid for parts of the company. Cleveland-Cliffs has already shown interest in acquiring blast furnace assets, though antitrust issues could complicate a deal.
Market Challenges Add Pressure
The steel market itself is not providing much relief. Hot-rolled coil prices, currently at $694–$675 per ton, remain well below benchmarks set by competitors like Nucor Corp NUE and Cleveland-Cliffs.
With auto demand softening and construction activity reliant on potential rate cuts, the outlook for steel pricing through 2025 remains cautious, the analyst notes.
Long-Term Potential
Despite the current turbulence, Peterson highlights US Steel's growth drivers, including the Big River Steel expansion and new product lines.
He sees the stock's standalone valuation supported by these initiatives, although investors may need patience to realize gains.
Takeaway
While US Steel faces immediate hurdles, its long-term potential remains intact, particularly if market dynamics improve or strategic domestic deals materialize.
Investors should weigh these factors carefully as the company navigates a challenging landscape.
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