ArcelorMittal, the Basic Materials sector company, was revisited by a Wall Street analyst today. Analyst Reinhardt van der Walt from Bank of America Securities reiterated a Buy rating on the stock and has a €43.00 price target.
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Reinhardt van der Walt has given his Buy rating due to a combination of factors that suggest a positive outlook for ArcelorMittal. The EU is adopting protectionist policies similar to those in the US, which are expected to lead to structurally higher volumes and prices for steel. This shift is anticipated to improve the company’s return on invested capital (ROIC) to match its weighted average cost of capital (WACC), resulting in more defensive and higher-quality earnings.
Furthermore, the potential for higher earnings is supported by updated estimates that reflect the latest commodity price forecasts. The analysis indicates that ArcelorMittal’s mid-cycle multiples could increase to a range of 5.5-6.5x, aligning with historical trading ranges before 2018. Additionally, upcoming policy changes, such as final tariff implementations and updates to the Carbon Border Adjustment Mechanism, could act as catalysts for further stock appreciation, reinforcing the Buy recommendation.