Yesterday, we heard that the Biden Administration was planning to put out a statement regarding the sale of U.S. Steel (NYSE:X) to Nippon Steel, a move that brought with it no shortage of controversy. However, now we’ve discovered the exact nature of that statement, and it’s a lot tougher than we originally forecast. As a result, the steelmaker’s shares were down over 1.5% in Thursday afternoon’s trading. The statement that emerged today seemed much more in favor of opposing the deal.
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Indeed, it noted that the U.S. needs to “…maintain strong American steel companies powered by American steel workers.” This has to come as a surprise to Nippon Steel, who already noted that there would be no job losses as a part of this acquisition, planning even to keep the name and the Pittsburgh headquarters.
Should Have Seen It Coming
While the move likely took a few by surprise, it probably shouldn’t have. Biden’s rival in the upcoming election, former President Donald Trump, already came out in opposition to the deal himself. For Biden not to follow suit might have cost him votes going forward. However, U.S. Steel has been heavily active in the electric vehicle market, as its thin steel systems are providing the vital superstructure involved in their construction. By getting in the way of a merger deal, the Biden Administration may be harming a source of electric vehicle supplies.
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 66.01% rally in its share price over the past year, the average X price target of $54.25 per share implies 36.17% upside potential.
