KeyBanc has maintained its Sector Weight rating on shares of US Steel (NYSE: X) following the company's third-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance update.
US Steel's updated forecast of $300 million, excluding stock compensation expenses, aligns with its previous projection range of $275 million to $325 million, as announced in the second-quarter earnings release on August 1.
The guidance reaffirms the company's financial outlook, which KeyBanc's estimates had pegged at $283 million, including stock compensation expenses, closely matching the consensus figure of $300 million, although it remains unclear whether this is directly comparable. In contrast, US Steel's second-quarter EBITDA was reported at $427 million.
After adjusting for an estimated $15 million in quarterly stock compensation expense, the revised third-quarter EBITDA guidance effectively matches KeyBanc's adjusted forecast of $298 million.
The company anticipates an increase in earnings from its Europe segment, while expecting declines in the Flat Rolled, Mini Mill/Big River, and Tubular segments. These segment results are generally consistent with KeyBanc's predictions, except for the Europe segment, which was initially expected to remain flat quarter over quarter.
US Steel's latest guidance provides insight into the company's performance across its diverse segments, with the Europe division showing an unexpected uptick in earnings.
In other recent news, Morgan Stanley maintained its Overweight rating, citing the company's third-quarter guidance which aligns with or surpasses market expectations. Also, GLJ Research upgraded its rating for US Steel shares to Buy based on a Sum-of-the-Parts analysis indicating potential growth. At the same time, JPMorgan also upgraded its stance on US Steel from Neutral to Overweight, lifting the price target to $42.00.
US Steel anticipates an adjusted EBITDA of approximately $300 million for the third quarter of 2024, and its adjusted earnings per share guidance ranges from $0.44 to $0.48. The company also announced its plans to start operations of the new Big River 2 facility in the fourth quarter, which is expected to incur approximately $40 million in related costs within the third quarter.
Despite facing market challenges and softening demand, US Steel's European segment is projected to post a quarter-over-quarter increase in adjusted EBITDA, largely due to a favorable adjustment in CO2 allowances. However, the Tubular segment is projected to see a decline in EBITDA due to lower average selling prices.
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