Shares of United States Steel (NYSE:X) rose on Wednesday morning following a key analyst upgrade. But are today’s gains a sign that investors have regained confidence in the “buy American” rhetoric, or will U.S. Steel slip again soon?
Last month, U.S. Steel fell off a cliff after it reported abysmal first quarter earnings. The steel company didn’t come close to reaching the Zacks Consensus Estimate of $0.32 per share, instead reporting a loss of $0.83 per share.
On top of that, U.S. Steel has greatly underperformed the Zacks categorized Steel-Producers industry. Its share price has dropped 47.4% over the last three months, while the industry fell just 13.1% overall.
So what is causing today’s mild rebound?
First, Credit Suisse (SIX:CSGN) analyst Curt Woodworth upgraded U.S. Steel to an “Outperform.” U.S. Steel was up as high as 4% on the news, but these gains slipped towards 2% as morning trading wore on. Still, traders are moving on the stock, which is trading more than 10 million shares over its normal 19.9 million volume.
Some of the current optimism rests on a buy-low stance. U.S. Steel’s stock rallied for months after Donald Trump was elected president on a pro-American manufacturing and infrastructure spending platform. But much of the steel sector has seen investors lose faith amid the seemingly constant D.C. turmoil.
However, today’s U.S. Steel jump might signal that some investors are renewing their faith that the summer construction season could at least see a small Trump boost. U.S. Steel shipped 3.65 million tons of steel in the first quarter of 2017, up from 3.59 million in the prior quarter.
Fellow steel company Nucor Corporation (NYSE:NUE) is also trading slightly higher on Wednesday. However, the broader VanEck Vectors Steel ETF (AX:SLX) is down.
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United States Steel Corporation (X): Free Stock Analysis Report
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