NEW YORK (AP) â¿¿ Shares of United States Steel Corp. rose Wednesday after the stock was upgraded by Credit Suisse and the broader market rallied on the tax-rate deal in Washington. US Steel was among the day's biggest gainers in the S&P 500 index.
THE SPARK: Credit Suisse boosted the stock to "Outperform" from "Neutral," saying that the 2012 fourth quarter would be a low point for earnings and higher steel prices will push up the shares early this year.
The upgrade came amid a broad rally after approval of a deal over taxes between President Barack Obama and congressional Republicans that averted the "fiscal cliff" for now. The Dow Jones industrial average briefly marked its biggest rise in six months before giving up some of the gains. For every stock that fell on the New York Stock Exchange, about 10 rose in afternoon trading.
THE ANALYSIS: Credit Suisse upgraded US Steel based on a forecast of rising steel prices, demand for steel to make cars and the fiscal-cliff deal. Analyst Richard Garchitorena added that concern about the Jan. 1 "fiscal cliff" and investors' fears about cyclical stocks should ease in coming months.
The analyst raised his estimate of US Steel 2013 earnings per share to $1.72 from $1.48, and 2014 earnings per share to $3 from $2.02. He also raised his 12-month target for the stock's price to $30 from $20.
SHARE ACTION: In afternoon trading, US Steel rose $1.78, or 7.5 percent, to $25.63. In 2012 it ranged from $32.52 in February to a low of $17.67 in June.