U.S. Steel shares should move towards $55, says Morgan Stanley

Morgan Stanley keeps an Equal Weight rating on U.S. Steel (X) saying the announcement from President Trump suggests that the proposed acquisition of U.S. Steel by Nippon Steel will be moving forward as a “planned investment.” The firm expects U.S. Steel shares to move towards its bull case of $55. In addition, other flat steelmakers Cleveland-Cliffs (CLF), Steel Dynamics (STLD), and Nucor (NUE) shares will underperform with the addition of a more sizeable global competitor in the U.S. steel market, the analyst tells investors in a research note. Moreover, Nippon’s promise to invest in U.S. Steel’s existing infrastructure and build a new greenfield steel mill would add further flat steel capacity and supply pressure to the U.S. market, which would disproportionately weigh on Cleveland-Cliffs, contends Morgan Stanley.