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On Monday, BofA Securities maintained a bullish stance on ArcelorMittal (NYSE:MT) shares, reiterating a Buy rating and a price target of $31.90. According to InvestingPro analysis, the steel giant appears undervalued, with shares trading at just 0.39 times book value and a P/E ratio of 14.1. The firm's analyst, Patrick Mann, commented on the steel giant's announcement of a new share buyback program, which follows the completion of its previous program on April 2, 2025. Mann views this move as a continuation of ArcelorMittal's capital return policy, which aims to distribute a minimum of 50% of free cash flow (FCF) less dividends to shareholders. InvestingPro data shows the company has maintained strong shareholder returns, with dividend growth of 25% and a current dividend yield of 1.89%.
ArcelorMittal disclosed the first tranche of the new program, involving the repurchase of 10 million shares. However, Mann pointed out that this should not be compared to the 85 million shares repurchased under the prior 2023-2025 program. He noted that while the rate of buybacks might slow down compared to the last five years due to the FCF outlook, the buyback program remains a potent method for delivering value to shareholders.
The analyst expressed approval of ArcelorMittal's balanced approach to growth and capital returns, highlighting the company's attractive valuation. The buyback announcement was made today, with ArcelorMittal seeking authorization at the upcoming Annual General Meeting (AGM) to repurchase up to 10% of its shares, approximately 85.3 million, which aligns with the previous program's scope. With a market capitalization of $18.5 billion and an overall Financial Health score of "FAIR" from InvestingPro, the company maintains a solid financial position to support its capital return initiatives.
In other recent news, ArcelorMittal's financial activities and strategic developments have captured investor attention. The company recently experienced a downgrade from Jefferies, which shifted its stock rating from 'Buy' to 'Hold' and set a price target of EUR 33.00. This decision comes amidst ArcelorMittal's notable year-to-date rally driven by rising steel prices and improved profit margins. Meanwhile, CFRA raised the price target for ArcelorMittal to EUR 29.00, citing the company's strategic growth projects and the anticipated demand boost from the energy transition.
JPMorgan also adjusted its price target for ArcelorMittal to EUR 30.50, maintaining a neutral stance due to concerns about global steel demand and potential geopolitical risks. In South Africa, the government is close to securing a funding deal to keep ArcelorMittal's local mills operational, which includes a support package for steelworkers. Additionally, European steel stocks, including ArcelorMittal, saw a surge following Germany's announcement of increased infrastructure spending and China's pledge to cut steel output. These developments reflect a complex mix of challenges and opportunities for ArcelorMittal in the current market environment.
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