Aperam S.A. Downgraded to Hold Amidst Challenging European Market and High Valuation

Jefferies analyst Tommaso Castello downgraded the rating on Aperam S.A. to a Hold today, setting a price target of €30.00.

Tommaso Castello’s rating is based on a combination of factors affecting Aperam S.A.’s market position and financial outlook. The decision to downgrade to a Hold rating stems from the weaker-than-anticipated performance in the European stainless steel market, where demand has been low and imports high, leading to EBITDA figures that are close to breakeven. This challenging environment in Europe contrasts with the limited benefits Aperam is seeing from recent U.S. stainless steel price increases, which have favored some of its competitors more significantly.
Despite Aperam’s diversified operations and a stable dividend yield, the current valuation appears high compared to historical averages, which limits its near-term upside potential. The company’s exposure to the Brazilian market remains a positive aspect, with expected growth following the expansion of its hot rolling facility. However, the muted development in recycling and renewables, along with the subdued market conditions, further contribute to the Hold rating. Overall, the lack of earnings momentum and the expectation of a delayed recovery in EU steel prices until late 2025 or 2026 underpin the cautious outlook.

In another report released on July 4, Morgan Stanley also maintained a Hold rating on the stock with a €28.60 price target.