Analysts in Credit Suisse (NYSE: CS) seek to answer a popular question among investors: how much premiums can the US Steel stock give? This is important as the company's shares went up by a stunning 140 percent year-to-date. The compromise between reward and risk continues to tease investors when it came to the company.
High profit margins
Credit Suisse cited US Steel's rocketing profit margins and growth potential before reiterating its high “outperform” ratings. The former has pasted a price target of $29 on stock. This price target assumes an additional premium of 60 percent from the closing $18.20 price of the stock on September 22. The note by former's analysts sent shares up. The peak on this day was a notable six percent. The session high was $19.31.
On September 23, the US Steel stock closed at a high of $19.95- a rise of 4.12 percent. This means that the share will rise much higher-and may go up to 53 percent from the present price, until the price target set by Credit Suisse is reached. The financial services company, on its note on September 23, said that it expects there will be a quick pullback in stock price. It added that the correction linked to hot rolled sheet is overdone. This “pullback” as referred by Credit Suisse relates to the past that shares of US Steel do fell through 34 percent on September 22.
The share price previously was approximately $27 for every share towards July end. The firm repeated that US Steel shares will have an event chance if going up in 2017 as the conversion costs fell. The financial services firm said that the higher median steel price giving a boost to the business pursued by US Steel. When mixed with increasing prices in the tubular products of the oil producing nations- that countries where the company has increased its yearly contract businesses, plenty of factors continue to exist to push higher the share prices of the company.
Even though many investors of US Steel sees an excellent upside to its earnings, not all are convinced. A certain number of analysts have the view that when considering the “underperform” rating, and the robust gains during the third week of September, it is an excellent time to lighten up the position of US Steel. This premise holds independent of hoe much undervalued the shares are.