U.S. Steel Drops 10% on Analyst Downgrade, Cycles Point Lower
Steve Miller | Apr 09, 2019 07:38PM ET
- United States Steel Corporation (NYSE:X) fell 10% on Tuesday after Credit Suisse (SIX:CSGN) downgraded the stock with a price target at less than half of its current value.
- In the near term, we agree as the stock’s market cycles point to an increasing risk in the coming weeks.
Credit Suisse analyst Curt Woodworth downgraded US Steel from neutral to underperform, adjusting his price target to $8 from $13. He noted the loss of market share, increased costs, as well as a profit outlook that is "highly concerning given still high sheet prices and a significant raw material squeeze ahead for Europe."
The VanEck Vectors Steel (NYSE:SLX) sank by 2% on the day. The fund is composed of publicly traded companies involved primarily in steel production.
The market cycles for X suggest the stock is in the declining phase of its current cycle. We expect further declines into late April. With just a few weeks to go in the correction, we see this as a basing period, with the summer likely more favorable.
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