Investing.com -- Salzgitter shares rose more than 4% on Monday after UBS upgraded the stock to “buy” from “neutral” rating and sharply raised its price target, pointing to what the brokerage described as significant “earnings leverage” to rising European steel prices and a discounted conglomerate structure.
UBS lifted its 12-month price target to €50 from €22.50, saying the stock has already doubled this year but still has room to rerate.
The brokerage said Salzgitter is the “highest beta play” on rising hot-rolled coil spreads in Europe, citing its financial leverage and concentrated exposure to the regional steel market.
Every €10-per-ton margin expansion adds roughly €50 million to steel production EBITDA, according to the report, which estimates 2025 EBITDA at €323 million before a recovery from 2026.
The brokerage also pointed to restructuring potential as a key driver of the upgrade. Salzgitter has disposed of several non-core assets, including the MST Group and its DESMA shoe-machine business, and Bloomberg has reported that the company may consider selling KHS, its bottling-machine division.
UBS noted that Salzgitter recently raised convertible debt backed by its roughly 30% Aurubis stake and said portfolio simplification could reduce leverage, which stands at about 2.8x net debt to EBITDA.
UBS said stronger steel spreads, delayed decarbonisation spending and a higher valuation for Aurubis contribute to the upgraded rating.
The brokerage raised its 2026 and 2027 EBITDA estimates by 11% and 43%, respectively, after adjusting for anticipated gains in steel prices.
