Metso shares up as J.P. Morgan adds stock to Positive Catalyst Watch ahead of CMD

Investing.com -- Metso (HE:METSO) shares rose over 2% on Wednesday after J.P. Morgan placed the Finnish industrial equipment maker on its Positive Catalyst Watch ahead of the company’s Capital Markets Day on Oct. 2. 

The brokerage cited improving profitability, favorable commodity exposure and strategic updates expected under new leadership as reasons for the move.

J.P. Morgan analysts said this will be the first major investor event led by Metso’s new chief executive and the incoming chief financial officer. 

The brokerage expects management to outline a bridge toward a 20% adjusted EBITA margin in the Minerals division, up from 17.5% in 2024. 

That would extend steady margin gains since 2021, when the merger with Outotec had only recently been completed. 

Group profitability has risen from 12.9% in 2021 to 16.5% in 2024, helped by about 400 basis points of improvement in Minerals and 300 basis points in Aggregates.

J.P. Morgan said consensus forecasts put Minerals’ adjusted EBITA margin at 18.6% in 2027, with its own estimate slightly higher at 18.9%. 

Analysts expect management to focus on increasing the aftermarket share of the division to around 70%, a shift viewed as necessary for sustainable profitability. The current mix has ranged between 60% and 68% in the past two years.

The brokerage also flagged Metso’s commodity mix, with copper accounting for more than 40% of sales and gold now its second-largest exposure. 

J.P. Morgan noted that the company has been positive on both markets. Copper is supported by electrification trends and demand for renewable infrastructure, while gold has drawn higher order activity from mid-sized miners amid elevated spot prices. 

Exposure to lithium and iron ore is more muted, with lithium markets mixed and iron ore largely tied to steel demand.

Aggregates has been weaker, with only four quarters of positive growth since early 2022. 

However, J.P. Morgan said the near-term outlook has turned more supportive. In North America, dealers have begun to restock, and large infrastructure projects are expected to help demand.

In Europe, sentiment is improving alongside fiscal stimulus in Germany, while a ceasefire in Ukraine could provide further tailwinds through reconstruction opportunities. Metso holds a leading market share in both North America and Europe.

The brokerage reaffirmed its “overweight” rating and €12.50 price target for December 2026, valuing the stock at 10.5 times its 2026 EV/EBITA forecast. 

Analysts said the shares, which closed Tuesday at €10.94, appear attractive both in absolute terms and compared with peers. 

They added that Metso remains one of the cheapest ways to gain exposure to a potential mining recovery.

J.P. Morgan cautioned that risks include delays in a mining recovery, which would weigh on demand for new equipment, as well as the company’s ongoing search for a permanent CFO. 

Still, analysts said the Oct. 2 event should provide clarity on capital allocation, profitability initiatives and growth plans, setting up an important stage for Metso’s next phase.