The wagons are circling, and with an election just a few months out, a unified front is going up across incumbent Washington, even on some of the smallest details. Indeed, Secretary of the Treasury Janet Yellen is coming out on President Biden’s side in the controversial U.S. Steel (NYSE:X) deal. Investors weren’t happy about it and sent the steelmaker’s shares down over 1.5% in Tuesday afternoon’s trading.
Yellen came out with at least a modest assent, saying, “I certainly accept” Biden’s view on U.S. Steel remaining a domestic steel firm. That objection, coupled with clear objection from the steelworkers’ union, is adding up to trouble for Nippon Steel, who originally won the competitive action to acquire U.S. Steel.
Now, reports suggest that Nippon Steel and U.S. Steel—despite approval from U.S. Steel stockholders—are planning to push back the time frame on their deal, looking for a close in the “second half of 2024.” That, interestingly, would put it out to after the 2024 election, which is probably a lot of why Joe Biden is objecting suddenly, to begin with.
Facing Resistance
Nippon Steel has had trouble with the union largely since the deal was announced. Overtures have been made and rebuffed, with one response from the union calling Nippon Steel’s move a series of “…empty promises and open-ended language that would enable it to skirt obligations to workers and retirees.”
That by itself would be a big problem, but it only gets worse when politicians, in an election year, get involved in a bid to look like they’re “protecting U.S. jobs.” Given the economic picture we’re already looking at, it’s not surprising incumbents are eager to improve their image therein.
Is U.S. Steel a Buy or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on X stock based on four Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 53.91% rally in its share price over the past year, the average X price target of $51.75 per share implies 28.57% upside potential.
