U.S. Steel is undergoing a transformation to become a tech-savvy steelmaker, making it an attractive play, according to Morgan Stanley.
Analyst Carlos De Alba upgraded the steelmaker to overweight from equal weight and named it a top pick on "the expected value creation from the company's transformational investments."
He increased his price target by $15 to $40, implying the stock could gain roughly 23.2% over the next 12 months.
"Furthermore, continuing interest from multiple parties in acquiring X, despite the near-term hit to FCF, highlights the value of the company's ongoing transformation strategy."
U.S. Steel, historically an integrated blast furnace steelmaker, is rapidly transforming by expanding its electric arc furnace, or EAF, capabilities and high value-add downstream offerings, De Alba said.
Persons:
Morgan Stanley, Carlos De Alba, De Alba, Steel, — CNBC's Michael Bloom
Organizations:
Steel, U.S . Steel, Cleveland, . Steel, Cleveland Cliffs
Locations:
U.S