U.S. Steel Lifts 1Q Profit Guidance On Strong Demand

United States Steel Corp. has revised its earnings outlook higher for the first quarter of 2021. The company’s CEO David B. Burritt said that “Strong market conditions and our well-timed acquisition of Big River Steel are allowing us to drive significant earnings growth.”

U.S. Steel (X) expects to report adjusted earnings of $1.02 per share in 1Q, which is higher than its earlier forecast of $0.61 per share. Moreover, it compared favorably to the analysts’ estimates of $0.73 per share.

The sectoral tailwinds, low steel supply chain inventories, and strong demand are expected to drive U.S. Steel’s adjusted EBITDA and earnings in the coming quarters. (See United States Steel Corp. stock analysis on TipRanks)

The company said that its 1Q earnings forecast excludes the “impacts related to acquiring the remaining stake in Big River Steel as well as impacts from non-recurring refinancing costs related to balance sheet enhancements executed in the quarter.”  

U.S. Steel expects to report an adjusted EBITDA of about $540 million in 1Q, which is also higher than the analyst’s estimates of $522.1 million.

On Feb. 24, Argus Research analyst David Coleman raised the stock’s price target to $23 (4.8% downside potential) from $20 and maintained a Buy rating.

In a note to investors, Coleman said that he expects the company’s acquisition of the remaining stake in Big River Steel to boost growth in 2021 and beyond. Meanwhile, improving demand and pricing further strengthens his bullish view.

Overall, the Street has a Moderate Buy consensus rating on the stock based on 3 Buys, 2 Holds and 1 Sell. The average analyst price target of $20.98 implies downside potential of 13.2% to current levels, given the share price rally of over 305% in one year.

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