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Shares of U.S. Steel (NYSE:X) are up over 7% in pre-open after the company offered guidance that came ahead of analyst expectations.
U.S. Steel expects to earn between $3.83 per share and $3.88, crushing the $3.20 expected from surveyed analysts. The company expects to see its adjusted EBITDA coming in “meaningfully higher than 1Q.”
“Our balance sheet remains strong with an overfunded pension plan and no significant debt maturities until 2029. Our strategic projects are pre-funded, with a current cash position approaching $3 billion, and we accelerated our stock buybacks in the second quarter,” CEO David Burritt said in the statement.
Morgan Stanley analyst Carlos De Alba reiterated an Equal Weight rating and a $27.00 per share price target despite “strong” guidance. The analyst paid special attention to “accelerating” buybacks.
“Quarter to date, X repurchased ~$320m of common stock, slightly above the $300m we modeled. The company has ~$210m remaining under the $800m stock buyback program.”
KeyBanc analyst Philip Gibbs commented:
“Better results vs. our model were likely driven by Flat Rolled and Big River Steel, each on volumes, responding to the post RUW panic-driven hedge buying, which has now aggressively ceased, as have pricing dynamics in U.S. and European HRC. Tubular is expected to increase sequentially, directionally consistent with our view, with pricing continuing to elevate on domestic restocking ahead of more drilling activity.”
