US Steel shares fall the most in a month on Wednesday as UBS downgrades stock to “Sell”, assigns price target of $10

Shares of United States Steel Corporation (X) registered their largest single-session loss in a month on Wednesday, after UBS downgraded the steel giant from “Neutral” to “Sell”. The firm also assigned a Street-low price target of $10 on the stock, as it estimates that near-term capital investment will probably not “reverse market share losses in the coming years”.

Shares of United States Steel Corp closed lower for a third consecutive trading session in New York on Wednesday. It has also been the steepest daily loss since April 9th. The stock went down 6.15% ($1.01) to $15.40, after touching an intraday low at $15.19, or a price level not seen since May 3rd ($14.88).

Shares of United States Steel Corporation have retreated 15.57% so far in 2019 compared with a 16.18% gain for the benchmark index, S&P Midcap 400 (MID).

In 2018, US Steel’s stock went down 48.17%, thus, it again underperformed the S&P Midcap 400, which registered a 12.50% loss.

“Geospatial analysis conducted by UBS Evidence Lab shows planned capacity additions will result in 2.6% more domestic market coverage for electric arc furnace (EAF) producers versus 2.5% less for blast furnace (BOF) producers by 2022,” UBS analysts wrote in a client note, cited by CNBC.

“We are reducing our 2019-2021 EBITDA estimates by 31% and raising our capex estimates by 94% on average. X is investing significantly in its asset base to remain competitive, but the result is negative free cash flow over three years (2019-2021 UBSe). We think the investment may only modestly reduce costs, and markets for new products may not be proven,” the analysts also noted.

According to CNN Money, the 14 analysts, offering 12-month forecasts regarding US Steel Corp’s stock price, have a median target of $18.00, with a high estimate of $31.00 and a low estimate of $10.00. The median estimate represents a 16.88% upside compared to the closing price of $15.40 on May 8th.

The same media also reported that 11 out of 18 surveyed investment analysts had rated US Steel Corp’s stock as “Hold”, while 5 – as “Buy”. On the other hand, 1 analyst had recommended selling the stock.

Weekly Pivot Levels

By using the traditional method of calculation, the weekly levels of importance for United States Steel Corporation (X) are presented as follows:

Central Pivot Point – $16.01
R1 – $17.86
R2 – $18.84
R3 – $20.69
R4 – $22.54

S1 – $15.03
S2 – $13.18
S3 – $12.20
S4 – $11.22