Can A New CEO Put The Strength Back In US Steel?
Looking ahead at a busy next two weeks for the U.S. steel industry (Section 232, inventory data, mid-quarter updates, WSD/AMM Steel Success Strategies conference), BMO Capital Markets analyst David Gagliano rated the United States Steel Corporation (NYSE: X) as Market Perform.
Under new CEO David Burritt, the leading steel producer has been focused on improving its flat-rolled operations and increasing the size of its asset revitalization program. Gagliano had a chance to meet with Burritt and discuss his future plans for the company (see David Gagliano's track record).
3 Key Takeaways
- Burritt highlighted that management has been pushing hard to increase the spending in its asset revitalization program in order to improve the company’s future demand outlook.
- The leading steel producer is still looking at different methods to improve its flat-rolled operations and expects to find a solution in the next three to four years.
- Burritt is focused on internal execution.
Gordon Johnson, Axiom analyst and managing director, expects the new CEO to take a much different approach. “More specifically, according to Mr. Burritt, while former CEO Mario Longhi was focused on geopolitical goals (i.e., lobbying leaders in Washington, D.C., for protectionist relief), he will spend his time improving the quality, yield, personnel, & overall operations of X’s many different production facilities.” In Johnson’s latest report, he rated the US Steel Corporation as a Sell (see Johnson's track record).
Overall, Gagliano concluded with, “We maintain our view that the multi-year capital spending needs facing US Steel are likely unavoidable and have the potential to yield a better positioned, more reliable, and higher-margin steel company over time.”
The US Steel Corporation was trading down almost 4 percent, at $19.88, during Thursday's trading session.
Related Links:
Gordon Johnson Warns US Steel Likely To Cut Guidance Again
A Long-Time US Steel Bear Is Impressed With New CEO, But Not With Stock
Latest Ratings for X
| Date | Firm | Action | From | To |
|---|---|---|---|---|
| Mar 2022 | Morgan Stanley | Upgrades | Underweight | Equal-Weight |
| Jan 2022 | Wolfe Research | Downgrades | Peer Perform | Underperform |
| Nov 2021 | Wolfe Research | Initiates Coverage On | Peer Perform |
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