Issue link: http://read.dmtmag.com/i/732012
I DA U N I V E R S A L S e p te m b e r - O c to b e r 2 0 1 6 51 It's been an unreal year for steel stocks. Shares of U.S. Steel have surged 30 percent in the past week, and are now up more than 240 percent on the year, a er the company's earnings release this week. What's notable, besides that huge fi gure, is just how badly the analyst community has missed the move. At the end of the year, the analysts who covered U.S. Steel collec- tively had a median price target of $10.50 on the $7.98 stock, according to FactSet; by the end of February, the median target on the then -$9.12 stock fell to $6.75. Fast-forward to the last trading day of July, when the stock rose as high as $27.55. After Being Left for Dead, Steel Stocks have Tripled on the Year Some analysts were more bearish than their peers, to the point of tilting toward the apocalyptic. Deutsche Bank's Jorge Beristain titled his 2016 steel industry preview note "the hour of reckoning," explaining that "as Metals & Mining producers continue to come under further stock market pressure, we expect further credit rating downgrades, further dividend slashes, dilutive As a result of this Dantean vision, Beristain reduced his price target on the stock to $5 in December. But a funny thing happened between there and Chapter 11. Beristain feared rising supplies from a steel- fl ooded China, but the U.S. Department of Commerce imposed massive duties on Asian steel, a er fi nding that steel producers had been "dumping" it onto U.S. markets. Import taxes on some types of steel rose as high as 522 percent. is, of course, vastly improved the dynamic for companies like U.S. Steel and AK Steel. e higher prices have led these compa- nies to crush their earnings estimates, and have mitigated the worst concerns around the sector. Both stocks have roughly tripled in value. Yet analysts still don't appear to be entirely buying it. e median price target on U.S. Steel is now $19.50, according to FactSet, which implies that almost a third of the value will be lopped off of the stock. at said, there may be a lag eff ect here, since more target hikes might be announced as the earnings are digested. Beristain, meanwhile, has li ed his price target to $23, noting the benefi ts provided by cost savings in addition to higher prices. Yet he warns that "risks remain," given that he expects to see "renewed import pressure." In the interim, his rating had been li ed from sell to hold. To be sure, this isn't the type of "reckoning" Beristain was expecting. ● www.cnbc.com 7/16 Alex Rosenberg W E L L E R W E W L L E R Tractor Salvage 800-255-9325 www.WellerParts.com Weller Tractor Salvage, Inc. 200 SW 40 Avenue Great Bend KS 67530 620-792-5243 You've Got... But Used Parts Shouldn't Be One Of Them At Weller Tractor Salvage, finding good new, used & rebuilt parts for your equipment is NO PROBLEM! Weʼve been in business since 1962, supplying parts for all makes & models of construction equipment for customers around the world. Motor graders are our specialty and we fabricate new replacement grader moldboards and circles. No matter what you need, give us a call. Weʼll do our best to find it. Inventory is added DAILY. Parts on the shelf are clean, inspected and ready to ship. Parts on machines in our yard can be removed, inspected, cleaned and on the way without delay. And if we donʼt have it - we probably know who does! Yo Y u've Got... But Used Parts Shouldn't Be One Of Them At Weller Tractor Salvage, 99 Problems 13&$*4*0/%*&4&-1"354t."+0364&/(*/&4t(-0#"-%*3&$5%&-*7&3:t'6--5&$)4611035 A diesel engine goes down. Work stops. But not for long. For 60 years, we've manufactured high quality replacement parts for major US engines and heavy-duty applications. Quick order response gets you up and working fast. Call us. 1-800-321-4234. ©2013 Interstate-McBee TRENDS AND TIDBITS continued from page 41 Trends continued on page 57