US Steel stock spikes after BofA upgrade

A contractor guides a steel beam into place while working on the Korean Air Wilshire Grand hotel and office building in downtown Los Angeles.
Patrick T. Fallon | Bloomberg | Getty Images
A contractor guides a steel beam into place while working on the Korean Air Wilshire Grand hotel and office building in downtown Los Angeles.

U.S. Steel shares surged 8 percent on Wednesday after analysts at Bank of America Merrill Lynch upgraded the firm's stock to "neutral" from "underperform."

"We raise our near-term steel price outlook," taking the 2016 estimated average hot rolled sheet (HRC) to $530 per ton from $485 per ton and 2017's estimate to $515 a ton from $485 a ton, BofA said, in a Wednesday note to clients. "U.S. Steel should see delayed benefit from the sharp recent rise in steel prices in its monthly/quarterly lagged sheet business, and lagged annual contract price resets can also support 2017['s estimate]."

BofA also raised its price target on the stock to $18 from $10. On Wednesday, U.S. Steel traded near $17.50 a share. BofA also said the firm's recent debt actions have "removed near-term debt maturity risk after its May placement of $980 million."

U.S. Steel's stock has dropped more than 24 percent in the last 12 months.

U.S. Steel 12-month performance

Disclosure: BofA has received compensation for investing banking services from U.S. Steel within the past 12 months.