Last Call: US Steel rises on spot-steel prices

UBS Investment Research analyst Timna Tanners said in a client note that U.S. Steel is her top choice among North American steel makers.

She cited higher expected sheet-steel prices and higher contract prices pass through into next year, plus the company's strong position as a supplier of pipe for oil and gas companies.

"Low imports, robust global demand, and high freight can support prices to 2009, in our view. We will monitor U.S. demand weakness but see limited imports and rising export helping offset (weak U.S. demand)."

Deutsche Bank analysts David S. Martin, who has a "Buy" rating on the shares, raised his price target on U.S. Steel's shares to $240 from $220.

"We maintain a positive outlook on steel prices and we think (U.S. Steel) is poised to show significant and 'above average' earnings gains in 2008 and 2009 via its integrated business model," he said.

"We believe many of (U.S. Steel's) 2007 operating issues, which are a major concern among investors, are behind it and we believe that financial expectations remain low for the company."

Shares rose $10.60, or 7 percent, to $161.15 in afternoon trading.