On Friday, BMO Capital Markets adjusted its outlook on US Steel (NYSE:X), reducing the price target from $43.00 to $40.00 while maintaining an Outperform rating. Currently trading at $30.39, US Steel remains below analyst targets ranging from $40 to $47. The revision comes after US Steel forecasted its fourth-quarter 2024 EBITDA to be around $150 million, which falls short of the initial projections that ranged between approximately $225 million and $275 million.
This new estimate by the company also comes in below the expectations of both BMO Capital Markets and the consensus, which stood at $230 million and $266 million, respectively. According to InvestingPro data, three analysts have recently revised their earnings estimates downward for the upcoming period.
The shortfall of around $25 million is partly due to increased start-up costs for BRS2, which BMO Capital views as a temporary issue. Even with this added expense, the extent of the earnings miss is generally in line with that of US Steel's industry peers. The firm noted that the earnings for the first quarter of 2025 are anticipated to be subdued due to the delayed impact of contract pricing.
This aspect, according to the firm, is likely already anticipated by the market. InvestingPro's Fair Value analysis suggests US Steel is currently undervalued, despite showing a -10.81% revenue decline in the last twelve months.
BMO Capital has consequently revised its earnings estimates downward in response to the weaker than expected performance in the fourth quarter of 2024. The firm's updated price target of $40 reflects these adjustments and the current outlook for US Steel as it navigates through the start of the new year.
The steel industry has been facing a variety of challenges, including fluctuating demand and pricing pressures. Companies like US Steel have had to adapt to these conditions, which can often lead to revisions in financial forecasts and market expectations. BMO Capital's latest assessment indicates a cautious but still positive view on US Steel's potential performance despite the recent setbacks.
In other recent news, United States Steel (NYSE:X) Corporation anticipates its Q4 adjusted EBITDA to be around $150 million, a downward revision from previous estimates. This comes after the company achieved its first coil production at its Big River 2 facility, marking the culmination of over $4 billion in growth capital investments. Despite this, U.S. Steel's CEO David B. Burritt acknowledged that the quarter's adjusted EBITDA guidance fell short of initial expectations due to persistently low steel prices and costs associated with the facility's ramp-up.
In other developments, the proposed acquisition of U.S. Steel by Nippon Steel Corp. has drawn mixed reactions. While a group of U.S. lawmakers has urged President Joe Biden to reject the deal, citing potential threats to American steel manufacturing, three prominent Black House Democrats have expressed support for the deal, highlighting Nippon Steel's commitment to invest in the steel industry and stimulate job creation.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.