UBS upgrades ArcelorMittal stock rating on EU steel price outlook

UBS upgraded ArcelorMittal's stock rating from Neutral to Buy, raising the price target to EUR71.00 from EUR61.00. The firm anticipates a significant surge in European Union steel prices over the next six months. Analyst Andrew Jones believes the shares are currently fairly valued at approximately EUR750 per ton of spot hot-rolled coil.

Despite a recent 5% decline in stock price over the past week, ArcelorMittal has shown strong performance, with a 57% return over the past year and a 35% increase year-to-date. UBS's analysis suggests the stock is undervalued relative to its Fair Value, with free cash flow yields around 6% to 8%. For every EUR10 increase in EU prices, EBITDA and free cash flow are estimated to rise by $325 million and $250 million, respectively.

ArcelorMittal is gaining market share through import displacement and is considered the most liquid play on the EU theme. The stock's valuation is below both long-term and 2019-2024 average enterprise value to EBITDA multiples. The firm identifies risks in North American hot-rolled coil pricing and import risks in Brazil and India.

ArcelorMittal's growth potential is estimated at $1.8 billion by 2029 through organic growth. While Q2 2026 earnings fell short of expectations, the company's outlook remains positive due to stronger pricing, improved cash generation, and a more favorable policy environment in Europe.