Analyst Update: United States Steel Corporation, Cliffs Natural Resources Inc, and Steel Dynamics, Inc.

Analysts are weighing in on United States Steel Corporation (X), Cliffs Natural Resources Inc (CLF), and Steel Dynamics, Inc. (STLD)

Celeste Taylor
Nov 14, 2016 at 3:39 PM
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U.S. stocks are treading water today, following the Dow's latest record high. Among stocks in focus today are commodity names United States Steel Corporation (NYSE:X), Cliffs Natural Resources Inc (NYSE:CLF), and Steel Dynamics, Inc. (NASDAQ:STLD). Here's a quick roundup of today's brokerage notes on X, CLF, and STLD.

  • X is up 6.9%, trading at $27.50, after Omega Advisors announced it had taken a stake in the steel stock. Additionally, X received some positive analyst attention this morning -- as did this sector peer -- with an upgrade to "overweight" from "equal weight" by Morgan Stanley, which also hiked its price target to $46 from $19. The brokerage firm cited President-elect Trump's $550 billion infrastructure plan, which should push the domestic steel market into "meaningful undersupply." On the charts, the stock tapped a new annual high of $27.83 earlier, and is up more than 240% so far in 2016, with recent pullbacks contained by its 200-day moving average. A handful of option bulls are likely cheering United States Steel Corporation's latest price action, with X's 10-day call/put volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) of 1.51 sitting higher than 88% of all other readings from the past year.

  • Mining stock CLF is also trading higher on positive attention from Omega Advisors and Morgan Stanley, up 1.2% at $7.48. Specifically, Omega Advisors disclosed a 1.1 million-share stake in the stock, while Morgan Stanley upgraded CLF to "equal weight" from "underweight" and hiked its price target to $9 from $3. Cliffs Natural Resources Inc is currently up over 370% so far in 2016, yet now still looks like a great buying opportunity for option players, given the stock's Schaeffer's Volatility Index (SVI) of 80% is in just the 17th percentile of its annual range -- suggesting options are pricing in relatively low volatility expectations. Meanwhile, the equity's Schaeffer's Volatility Scorecard (SVS) of 97 indicates it has tended to outperform option traders' volatility expectations over the last 12 months. 

  • STLD is also enjoying the sector-wide lift today, up 2.7% at $33.15, after receiving some mixed analyst attention. For example, Morgan Stanley raised its price target to $45 from $25, but Berenberg downgraded the stock to "hold" from "buy" -- though it also upped its price target to $36.50 from $35. Steel Dynamics, Inc. touched an eight-year high of $33.17 earlier, and is up over 85.5% year-to-date. In the option pits, Steel Dynamics, Inc.'s Schaeffer's put/call open interest ratio (SOIR) of 0.24 sits in just the 6th percentile of its annual range, suggesting near-term option players have rarely been more call-biased at any point during the past year.
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