- U.S. Steel (X +6.9%) enjoys a relief rally today after Q3 earnings and revenue exceeded expectations, negating yesterday's "sympathy selloff" sparked by the surprise Q3 loss and revenue miss from rival AK Steel.
- Jefferies maintains its Buy rating and $33 price target on U.S. Steel in reaction to the Q3 report, which showed improved operations at the company's mills; a 4.5% increase in flat-rolled volume was better than expected and marginally offset by lower average selling prices of 1.2%.
- Credit Suisse (SIX:CSGN) reiterates its Outperform rating and $34 price target, noting that U.S. flat rolled steel volume was weak and cost pressures mounted but EBITDA declined only ~$20/ton.
- But the skeptics at Axiom Capital say Q3 results were "not of an organic nature" but instead due to the company's move to value its assets at a higher level, which is lifting this year's EBITDA by "at least" $243M.
- Excluding this accounting change taken this year, the company's 2017 EBITDA guidance would be $870M, vs. the announced consolidated adjusted EBITDA view of ~$1.075B, says Axiom's Gordon Johnson.
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