MS cuts ArcelorMittal as stock's re-rating runs ahead of fundamentals

Voestalpine AG

14/02/2025 07:14

** Morgan Stanley cuts ArcelorMittal  MT.AS  to
"equal-weight" from "overweight," as the stock's re-rating is
running ahead of fundamentals 
    ** The stock's sharp outperformance has been underpinned by
an inflection in the steel maker's spot EBITDA run-rate and
expectations of an improved backdrop in Europe, MS says
    ** The "swift re-rating" is disproportionate vs the
potential earnings impact from potential Ukraine reconstruction,
of which ArcelorMittal is seen as a direct beneficiary, MS adds
    ** Over the past two weeks, the stock has gained about 14.6%
in value
    ** The broker prefers to wait for clarity around U.S.
tariffs, as well as the outcome of ongoing policy reviews in
Europe
    ** The long-term investment case remains, however, intact,
MS says, citing robust policy developments in Europe and the
promising supply-side reforms in China
    ** It applauds ArcelorMittal's disciplined capital
management and strategic focus on decarbonisation investments,
alongside its growing presence in regions with strong steel
fundamentals like India, Brazil, and North America
    ** It prefers Volestalpine  VOES.VI  ("overweight") over
peers in the steel sector like Salzgitter  SZGG.DE 
("underweight") and Erdemir  EREGL.IS  ("underweight")

 (Reporting by Anna Peverieri)
 ((Anna.peverieri@thomsonreuters.com))