US Steel (NYSE:X) -2% in Monday's trading as BMO Capital downgrades shares to Market Perform from Outperform with a $45 price target, saying the current share price is near fair fundamental value and that uncertainty over the form of a potential deal with Nippon Steel (OTCPK:NPSCY) (OTCPK:NISTF) is too great to maintain its rating based solely on the premise a transaction is completed.

With US Steel (NYSE:X) shares up 26% YTD compared to a small increase for peers, trading at 5.5x estimated 2026 EV/EBITDA vs. closest peers at ~6x, the stock is approaching fair fundamental value, BMO analyst Katja Jancic says.

Reports last week indicated that Nippon Steel (OTCPK:NPSCY) (OTCPK:NISTF) may offer up to $7B in incremental investments to salvage its proposed acquisition of US Steel (X), and the U.S. Department of Justice recently filed a motion to extend the briefing deadlines in the CFIUS litigation to allow the government to complete its ongoing discussions with the parties regarding the merger; Jancic says these events imply that dialogue with the government remains open, but Trump has spoken out against foreign ownership on numerous occasions.

Also, Jancic upgrades Steel Dynamics (STLD) to Outperform from Market Perform with a $145 PT, saying the company is "a best-in-class domestic U.S. steel producer with a product portfolio that is relatively well-positioned to benefit from expanded Section 232 tariffs."

Steel Dynamics (STLD) is expected to deliver above-peer free cash flow generation, the analyst says, seeing Sinton turning a corner with a multi-year investment cycle approaching completion, which should support healthy shareholder returns.