JPMorgan sees valuation support for U.S. Steel above $40 per share

JPMorgan says that following 382 days since U.S. Steel (X) accepted Nippon Steel’s (NPSCY) (NPCSY) $55 per share takeover bid, the Biden administration officially blocked the deal on “national security” and “critical supply chain” concerns. The firm views the deal’s demise as a “clear deterrent” for foreign entrants interested in buying entry into the U.S. steel market, which it calls one of the most attractive globally given elevated pricing and protectionism as well as long-term demand tailwinds from a growing population and reshoring. The shares are likely take a “knee-jerk step down” at the open to the high $20s, but JPMorgan still sees standalone valuation support of greater than $40 per share for U.S. Steel, the analyst tells investors in a research note. As such, the firm keeps an Overweight rating on the name. The stock in premarket trading is down 7% to $30.25.