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ArcelorMittal: Analysts See Massive Upside

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Mar. 11 2019, Published 12:03 p.m. ET

ArcelorMittal

For ArcelorMittal (MT), among the analysts polled by Thomas Reuters on March 8, eight recommended a “strong buy,” eight recommended a “buy,” and five recommended a “hold.” ArcelorMittal’s mean consensus target price of 28.36 euros represents a potential upside of 51.6% over its closing price on March 8. ArcelorMittal’s target price implies the highest upside among the steel stocks that we’re covering in this series. U.S. Steel (X), AK Steel (AKS), and Nucor (NUE) are trading 28.6%, 11.9%, and 17.8%, respectively, below their consensus target prices.

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Essar Steel

ArcelorMittal has bid to acquire Essar Steel—a bankrupt steel company in India. However, the acquisition has faced several regulatory hurdles. Last week, ArcelorMittal received a break when one of India’s bankruptcy courts approved the company’s bid. The acquisition process could still be a bumpy road. According to Economic Times, “the legal wrangling over the bankrupt steel firm may not be over yet, with the promoter Ruia family and British bank Standard Chartered seeking permission to appeal against the order. “

Earnings

ArcelorMittal is expected to post revenues of $18.7 billion in the first quarter—compared to $18.3 billion in the fourth quarter and $19.2 billion in the first quarter of 2018. However, the company’s adjusted EBITDA is expected to rise to $2.0 billion in the first quarter from $1.95 billion in the fourth quarter of 2018.

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