MS says European steel sector's YTD rally is overdone, downgrades Outokumpu

Outokumpu Oyj

27/02/2025 11:03

** Morgan Stanley stays selective on European stainless steel, saying the sector's YTD rally looks overdone as earnings inflection remains elusive

** The market has expected a more supportive demand backdrop in the wake of a potential Russia/Ukraine peace deal, the broker says

** It cuts Finland's Outokumpu OUT1V.HE to "underweight" from "equal-weight", calling the recent re-rating (+30% YTD) overdone, as the company's earnings lag peers, given its pure stainless steel exposure, while capex uncertainties remain

** It prefers Acerinox ACX.MC ("overweight"), saying the Spanish group's U.S./alloys exposure underpins its superior earnings momentum, and keeps Aperam APAM.AS at "equal-weight"

** MS sees downside to 2025 consensus estimates across the board, warning of uncertainty in Asia

 (Reporting by Elviira Luoma)

 ((Elviira.luoma@thomsonreuters.com))