- U.S. Steel (X -5.2%) is giving back much of yesterday's 7% surge that followed its strong Q2 earnings beat, as analysts weigh in with caution a day later.
- Longbow Research downgrades X and AK Steel (AKS -4.2%) to Neutral from Buy, citing uncertain pricing, Pres. Trump's comments about a delay in implementing tariffs, and in U.S. Steel's case the stock's recent run.
- Longbow now sees only a 50% likelihood of a positive outcome from Trump’s investigation, down from a 70% chance just a month ago.
- Meanwhile, analysts at BMO suggest X may have run up too much, mindful of the company's "disaster quarter" just three months ago and noting the company's history of quarterly earnings volatility.
- Longbow prefers mini-mill names including Nucor (NUE +0.7%) and Steel Dynamics (STLD +0.5%) for their exposure to non-residential construction, lower hot rolled coil cost structures, relative insulation from the auto industry and strong balance sheets.
- Now read: S&P 500 Dividend Aristocrats Net Gain Leaders Are Nucor, Chevron (NYSE:CVX), And Grainger In May Per Analyst Targets
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