What Wall Street Really Thinks about ArcelorMittal
Reading the Steel Rally: US Steel Stocks in April
ArcelorMittal
According to consensus estimates compiled by Bloomberg, ArcelorMittal (MT) has a one-year price target of $4.82, which is 2.5% above its April 4 closing prices. Out of the nine analysts surveyed by Bloomberg, only one rates the stock as a “buy,” and only one analyst rates the stock as a “sell.” The majority rates ArcelorMittal as a “hold” after its recent run-up.
Recent recommendation changes
Given recent analyst recommendations, Steubing, a Germany-based company, has set a target price of $9.9 on ArcelorMittal, in addition to a “hold” rating. However, Steubing has cut its target price from $13. It’s important to note that ArcelorMittal is widely covered by Europe-based brokerage houses, as the company is listed on European stock markets (VGK) (EZU).
Credit Cuisse is also bullish on ArcelorMittal and has given the stock a one-year price target of $6. However, Cowen Company, Jefferies, and Clarkson Platou Securities are bearish on ArcelorMittal and have a lower price target for the company (see graph above).
Who will bail out the company?
Analysts seem to be banking on MT’s chairman, Lakshmi N. Mittal, to bail out the company. Mittal and his family collectively hold more than a third of MT—way too much to let MT fail. Notably, the recently announced rights issue saw the Mittal family put ~$1 billion into the company. We should also note that other steel companies with high financial leverage, such as AK Steel (AKS) and U.S. Steel Corporation (X), don’t have the backing of a billionaire owner pumping cash into the works.
That said, ArcelorMittal’s real turnaround will depend on the revival of European steel industry. Keep reading for an analysis of how European steel market conditions are playing out as of April 4, 2016.
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