Saying they expect steel prices to rise, UBS (NYSE:UBS) added US Steel (NYSE:X) to their Short Term Buy list.
"We put a Short-term Buy rating on U.S. Steel on the back of our conviction that steel prices are about to rise. We think it is a beneficiary, with Buy-rated Steel Dynamics (Nasdaq:STLD), because it has captive iron ore in the U.S. and can see margins improve when price hikes stick. We forecast HRC at $650 for 2011, up from recent spot at $520-$560. We think Nucor (NYSE:NUE) may underperform peers given it has less captive raw materials."
Having its own iron ore resources generates a competitive advantage for US Steel, which should enjoy stronger margins and earnings for the quarter.
UBS maintains their "Neutral" rating on US Steel. The steel producer closed Tuesday at $44.85, gaining $1.56, or 3.60 percent. UBS increased their price target from $42 to $43.
1 comment:
Come 2011 they will claim that they did not foresee an economy that has remained sluggish. The bus trading desk should at least be peeked at to see how they are trading the stock vis-a-vis their clients and their own money. What funds are they dumping this stock on. US Steel is losing money at a rate of 300 million a quarter. Even at a price greater than the 620 for Hrc, they possted a GAAP loss in the second quarter.
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