Market Commentary and Intraday News
Shares of US Steel fall as analyst lowers ratings
246 days ago
(AP:NEW YORK) U.S. Steel will face more intense completion with demand from China slowing and more pressure on margin because of raw material costs, according to Nomura Equity Research. Shares fell more than 3 percent and there was a broad sell-off in the sector as well.
THE SPARK: Nomura analyst Curt Woodworth lowered his rating on U.S. Steel to "Neutral" from "Buy" Thursday, and his share price target to $20 from $32. He also cut some earnings estimates.
THE BIG PICTURE: The U.S. steel industry has seen weak demand from manufacturers amid slowing global economic growth, particularly in China. That has created ample inventories of steel.
The domestic steel industry has a limited ability to lower raw material costs, which has kept prices for U.S. steel products higher, Woodworth said.
THE ANALYSIS: The steel industry will face more competition over the next several months as a result of the changing marketplace, Woodworth predicted.
U.S. Steel's "earnings power is most eroded in a world of lower raw materials prices given its captive iron ore and self-sufficient coke (coal) position," he wrote.
Woodworth lowered his third-quarter per share estimate to a loss of 5 cents from break-even. Analysts surveyed by FactSet have predicted third-quarter earnings of 2 cents per share.
For the full year, Woodworth predicted earnings of $1.50 per share, compared with his previous estimate of $2.05 per share. Analysts have forecast earnings of $1.57 per share.
Woodworth lowered his 2013 estimate to 40 cents per share from $3.30. Analysts predict 2013 earnings of $2.37 per share.
SHARE ACTION: In morning trading, shares of U.S. Steel fell 71 cents, or 3.4 percent, to $20.15. In the past 52 weeks, the price has ranged from $17.67 to $32.52 per share.
In other trading, shares of AK Steel Holding Corp. dropped 21 cents, or 3.8 percent, to $5.34; ArcelorMittal fell 40 cents, or 2.4 percent, to $15.98; and Nucor Corp. was down 35 cents to $39.23. Steel Dynamics Inc. shares dropped 13 cent to $11.99.
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