ArcelorMittal upgraded to Buy at Deutsche Bank with risks ‘better understood’

As previously reported, Deutsche Bank analyst Bastian Synagowitz upgraded ArcelorMittal to Buy from Hold with a price target of $31, up from $29. A weak cycle has “forced bulls into a reality check on ArcelorMittal,” says the firm, which expects a tough second half. However, Deutsche believes the risks are better understood at these levels and views the upside potential based on a reversion to mid-cycle as “significant,” the analyst added, noting that 75% of ArcelorMittal’s steel earnings are tied into attractive markets that trade at a premium. Valuation multiples are “wrongly” held hostage by the European business that is “literally priced at zero,” but management has taken advantage of this and already bought back about 37% of the equity since September 2020, according to the firm.