U.S. Steel’s (NYSE:X) attempt to sell itself off has been fraught with drama and controversy for the last several months. Now that it finally looked like the whole thing was, at last, about to be settled, politicians remembered it was an election year and decided to go for some sound bites. As a result, the steelmaker is down over 11% in Wednesday afternoon’s trading, with Joe Biden himself apparently planning to lodge some “concerns” about the deal.
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President Biden plans to offer up a statement about the planned sale of U.S. Steel to Nippon Steel. While Biden isn’t planning to go so far as to request the deal be blocked, he will instead make the somewhat less committal statement that the deal needs “serious scrutiny” before going through.
Some here will likely believe that it already has gone through enough scrutiny, and therefore, this remark is largely meaningless. Meanwhile, reports revealed the motive behind the non-remark; Biden administration officials told the Japanese government that the statement was being made in a bid to retain support in Pennsylvania.
There Is a Potential for Plant Closures
Then again, Pennsylvanians may have reason for concern after all. While Nippon Steel did express interest in the Arkansas plant of U.S. Steel—specifically the electric furnace technology contained therein—there wasn’t nearly so much said about the Pennsylvania plants. It doesn’t help matters that Nippon Steel has been closing steel plants in Japan, which has left some wondering if the Pennsylvania plants will be next on the chopping block as Nippon Steel basically picks up U.S. Steel for the technology.
Reports from the United Steelworkers (USW) union, meanwhile, aren’t encouraging either, as Nippon Steel has not yet “…earned the trust of the USW.”
Is U.S. Steel Stock a Good Buy?
Turning to Wall Street, analysts have a Hold consensus rating on U.S. Steel stock based on three Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 53.65% rally in its share price over the past year, the average X price target of $54.25 per share implies 31.96% upside potential.
