Gordon Johnson, an analyst at GLJ Research, downgraded United States Steel Corporation (NYSE:X) from Buy to Sell on May 30, pointing to possible overvaluation in the proposed US Steel-Nippon acquisition and issues with the company’s handling of its Big River plant.
Notably, Johnson used a simplified comparable company analysis, taking into account the 2025 predicted consensus EBITDA for several US Steel’s competitors alongside their annualized first-quarter 2025 EBITDA. According to the analyst’s findings, Nippon, which has expressed intentions of acquiring US Steel, might be overpaying by a significant amount.
Johnson’s analysis also emphasized US Steel’s poor performance over the previous 21 quarters as compared to EAF-based companies. He noted that US Steel and other integrated steel manufacturers are at a disadvantage due to the high operational leverage and fixed overhead expenses of blast-furnace technology. On the other hand, EAF-based operations have cheaper capital costs, improved energy efficiency, and more flexibility.
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