United States Steel Corp. (X) shares were down nearly 3% Friday on heavy trading volume after analysts at Cowen downgraded the company to "underperform" from "market perform" and slashed the company's price target to $20 per share from $24 per share.
Cowen analyst Novid Rassouli does believe U.S. Steel is an "undercover iron ore play" giving it some upside.
"We expect finished steel and iron ore prices to move lower and see U.S. Steel's vertically integrated iron ore supply as a headwind. U.S. Steel is essentially an undercover iron ore play because as iron ore prices rise, steel prices traditionally follow suit, and X benefits from the fixed price of its internally sourced iron ore," Rassouli said.
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