United States Steel's Gloomy Outlook Sparks Analyst Drubbing

Macquarie downgraded X to "underperform" and cut its price target in half

Digital Content Manager
Sep 19, 2019 at 10:06 AM
facebook twitter linkedin


The shares of United States Steel Corporation (NYSE:X) gapped lower at the open today, and are now trading down 13.9% at $10.72, after the company late Wednesday updated its third-quarter forecast to a loss of 35 cents per share -- arriving well below the consensus estimate for a loss of 7 cents. The firm cited falling steel prices and deteriorating market conditions in Europe for its gloomy outlook. 

Macquarie downgraded X by a couple of notches to "underperform" from "outperform," and slashed its price target in half to $9, while Credit Suisse trimmed its target to $8 from $9. This adds to the already bleak analyst sentiment toward X; prior to today, only two analysts in coverage had given the security a "buy" or better rating, while the other nine call it a "hold" or "sell."

X is well on pace for its third consecutive daily decline -- a move catalyzed by its declining 100-day moving average. In fact, this isn't the first time the stock has sunk after a run up to the trendline, with two other rally attempts stopped by this ceiling in 2019. This trendline resistance has really done a number on X, considering its 64% year-over-year deficit. 

The stock has already been put on the short sale restricted (SSR) list for today, but the longer-term negative price action has been drawing out plenty of shorts in recent weeks. During the last two reporting periods, short interest on U.S. Steel rose 54.6%. The 51.73 million shares sold short make up a hefty 30.6% of the stock's available float, and represent 4.5 times X's average daily trading volume. 

 

 

 

 

These investors are using the market's volatility to their advantage and scoring triple-digit gains on many of their trades.

Even in today's sideways bear market, this trading strategy has continued to provide consistency and profitability to a small group of investors. By using this approach, these traders are removing directional risk and still hitting triple-digit returns. If you want access to this strategy, and lower risk with higher returns sounds good to you, then don't wait another minute.

Join us now to receive our next trades the moment they come out!

 

Common mistakes options traders make
 


 


 
Special Offers from Schaeffer's Trading Partners