.September 9, 2024 4:05:00 PM

US Steel (NYSE:X) shares surged over 4% after GLJ Research upgraded the company to Buy from Sell, citing potential upside despite recent declines. Shares dropped 37% since December 2023, while the market gained 14%, partly due to concerns over Nippon Steel’s acquisition being blocked by President Biden.

Analysts believe market pessimism on US Steel is excessive, projecting a 23.3% potential upside from current price through SOTP analysis. Factors include peer-industry multiples, 2025 EBITDA estimates, and the anticipated revenue boost from Big River 2’s ramp-up in Mini Mill segment.

Current price of US Steel doesn’t fully reflect Big River 2’s impact, which is expected to double Mini Mill revenue in 2025. Analysts argue that high valuations for domestic steel assets support the buy rating, as investors are willing to pay premiums for such assets.