ArcelorMittal Shares Surge Following Major Bank Upgrade

2026-10-09 companies

Paris, Friday, 9 October 2026.
ArcelorMittal stock jumped over 4% on October 9, 2026, after UBS upgraded the steelmaker to Buy, citing huge earnings potential if European steel prices rebound.

Market Reaction and Upgrade Details

ArcelorMittal (NYSE: MT) shares experienced a significant rally on October 9, 2026, driven by a rating upgrade from UBS [1][2]. The Swiss banking giant elevated its recommendation from Neutral to Buy, adjusting the price target from EUR 61 to EUR 71 [2][4]. This adjustment represents a potential upside of 16.393 percent relative to the previous target [1]. On the day of the announcement, shares traded on the CAC 40 index rose by approximately 4.3% to 5.46%, reaching prices between EUR 56.54 and EUR 57.18 depending on the trading venue and time [1][3][7]. The stock’s performance positioned it as a top performer on the Paris bourse, recovering from a decline of nearly 20% over the preceding month [1][7]. Some investors utilized the upgrade to take profits, causing slight volatility despite the bullish news [5].

Market Reaction and Upgrade Details

The upgrade occurred against a backdrop of mixed recent performance, with the stock delivering a 57% return over the past year despite recent weakness [2]. Year-to-date, the shares were up 35% prior to this week’s movement [2]. The current market capitalization stands at approximately EUR 43.1 billion as of October 9, 2026 [6]. Trading volume and sentiment indicators suggest a technical buy signal, with the Relative Strength Index (RSI) previously reflecting oversold conditions [3][5]. The rally places the stock price above its 200-day moving average, although it remains below the 20-day moving average [3].

Steel Price Outlook and EBITDA Impact

The core of UBS’s bullish thesis rests on an anticipated recovery in European steel prices over the next six months [2]. Analysts project that European hot-rolled coil prices will increase from approximately EUR 750 per ton to a range between EUR 805 and EUR 820 per ton by April 2027 [1][2]. According to UBS estimates, every EUR 10 per ton increase in these prices contributes approximately USD 325 million to ArcelorMittal’s EBITDA and USD 250 million to free cash flow [2][6]. This sensitivity highlights the company’s high operating leverage to regional pricing dynamics, particularly as import duties of 50% on non-quota steel have kept import costs above EUR 900 per ton since July 2026 [1].

Steel Price Outlook and EBITDA Impact

UBS analysts note that while Chinese exports weigh on markets outside Europe, ArcelorMittal’s production capacity in India and Brazil will help offset this pressure [1]. At the projected price range of EUR 805 to EUR 820 per ton, free cash flow yields are expected to rise to between 6% and 8% despite substantial growth capital expenditures [2]. The bank values the company by combining a discounted cash flow method with a target multiple of 5.3 times enterprise value to EBITDA [1]. Currently, the stock trades at a modest enterprise value-to-EBITDA ratio of 5x for 2027 and 4x for 2028 [1].

Operational Context and Risks

Operational developments have complemented the positive pricing outlook, including the restart of a blast furnace at ArcelorMittal Eisenhüttenstadt on October 6, 2026 [7][8]. However, challenges persist, notably the inability to restart operations at the Kryvyi Rih facility in Ukraine following missile strikes, which may lead to non-cash impairment charges [6]. Financially, the company reported second-quarter 2026 revenue of USD 16.76 billion, slightly below the expected USD 16.99 billion [2][6]. Despite the revenue miss, adjusted earnings per share were reported at USD 0.90, and the company maintained a confident outlook for future years [3][6].

Future Projections and Investor Sentiment

Looking ahead, UBS forecasts free cash flow yields of 6% in 2027, rising to 8% in 2028 and 2029 [1]. ArcelorMittal management has confirmed an ambition to increase annual EBITDA potential by approximately USD 1.8 billion during fiscal year 2026 through organic growth and mergers and acquisitions [1]. The company’s next earnings report is scheduled for November 5, 2026, which will provide updates on shipment volumes and margins [6]. Investors are advised to monitor forward prices and order volumes to confirm whether this rally represents a sustainable cyclical recovery or a short-covering bounce [7].

Sources

Stock rating Steel industry