– Sectors – U.S. Steel Corp. (X)

February 9, 2023

An Unexpected “Global Steel Price Reset” Appears Fated; We Move X to SELL from BUY; Yr-End ’23 PT Moves to $13.85 from $42.75 Prior

By Gordon L. Johnson II

Despite a Strong Reaction in the Stock the Day it Reported Q4 Earnings (i.e., Feb. 3rd), with Big River (i.e., X’s Mini-Mill) Reporting Negative EBIT in Q4, as Well as Negative EBIT in X’s USSE…

U.S. Steel Corp. (X)

An Unexpected “Global Steel Price Reset” Appears Fated; We Move X to SELL from BUY; Yr-End ’23 PT Moves to $13.85 from $42.75 Prior

While the “Haters are Going to Hate”, an Acute Lack of Investment in “Stuff” = Higher Steel Prices

2Q Review: Best of the Best for X, Less for the Rest, & Next Quarter We Expect an Even Better “Best”

US Steel’s Shr Price is an “Embarrassment” to Reality; at Just 80% of Curve, we see ~69% Upside

Robust HRC Prices Lasting Longer than Expected, & Low US Inventories, Push Us Back to Tactical BUY

Anticipating a Strong 4Q Print, but See Emerging Headwinds, Move to the Sidelines With a HOLD Rating

“Steel Reflation” Trade is Solidly Back in Play & w- ’21 Consensus HRC Ests. Too Low, we Move to BUY

Steel Stocks Set to Rally N-Term, But “Acute” Headwinds Forming into ’21; Cut PT, Maintain HOLD

“Infinite” Fed Stimulus + Coming Trump Infra Plan = N-Term Upside; Move to HOLD on Rotation Trade

Are X’s Gross Margins at Risk of Turning “Red” in 2Q20, Rendering ’20 Street Forecasts Aspirational?

Is a Sharp 2020 EPS Est. Cut “On Deck” & Does it Even Matter to X’s (already low) Stock Price?

US Steel’s Move Today Suggests To Us its Viability as a Going Concern Is a Real Threat Thru 2020

US Steel’s Leverage Appears Set to Spike into Downturn; PT Cut to $4-shr on Debt + Macro Headwinds

Inability to Absorb Costs During “US Steel Golden Age” = Deep Losses Likely from High Op. Leverage