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On Thursday, JPMorgan upgraded Acerinox SA (ACX:SM) (OTC: OTC:ANIOY) from Neutral to Overweight, albeit with a slight adjustment in the price target to €12.10 from the previous €12.20. The upgrade reflects the firm’s analysis of the company’s recent acquisition activities and its impact on earnings.
The JPMorgan analyst highlighted that Acerinox (BME:ACX), a notable player in the steel industry, previously generated approximately 90% of its EBITDA from operations in the United States. This figure has now changed following Acerinox’s acquisition of Haynes, which now accounts for approximately 70% of its EBITDA deriving from the US. This shift positions Acerinox as the company with the highest sensitivity to potential US market changes within JPMorgan’s steel coverage.
The acquisition of Haynes is seen as a strategic move that diversifies Acerinox’s cash flows into a specialized market characterized by strong growth and market concentration. The JPMorgan analyst believes this diversification into a niche market is positive for the company’s long-term prospects.
Despite the optimistic view on the company’s strategic direction, the analyst suggests a cautious approach for investors, indicating a preference for a more favorable entry point before taking a position in Acerinox’s stock.
The slight reduction in the price target from €12.20 to €12.10, while upgrading the stock rating, suggests that while the overall outlook on Acerinox is positive, there are still factors that warrant a conservative valuation. The analyst’s commentary provides insights into the company’s current financial dynamics and strategic moves without speculating on future market behavior or broader industry trends.
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