Macquarie analyst David Lipschitz initiated U.S. Steel with an Outperform and a $31 price target. The analyst said steel prices have recovered from the bottom due to low inventories and trade tariffs, giving steel companies breathing room on margins. Lipschitz expects near-term steel prices to decline modestly due to the delay of Section 232 investigation and an uncertain demand outlook, but believes hot roll coil price will normalize around $600/st beyond 2017 and will not test the lows of the previous cycle given supportive inventories and lead times. He said U.S. steel is better positioned in a steady demand growth environment and expects earnings to be resilient due to an improved cost structure and the asset revitalization program.

Says will continue to buy back stock "hand over fist." Says Cleveland-Cliffs (CLF) "the only U.S. solution" for U.S. Steel (X). Says will have to "re-assess value" of U.S. Steel. Says targeting net debt to EBITDA of 2.5x. Says balance sheet in "great shape, near record liquidity." Sees CapEx ~$1B/year from 2025-2028. Comments taken from Q1 earnings conference call.