ArcelorMittal (MT) share price forecast: What’s next for the steel producer?
ArcelorMittal (MT) stock has moved into positive territory after falling in January amid tensions between Russia and Ukraine.
In January, the ArcelorMittal share value fell nearly 7%. The price action remained volatile as Russia prepared to invade Ukraine.
Ukraine is an important location for ArcelorMittal. The company has iron ore mining and steel production facilities in the Kryvyi Rih region.
On 3 March, the company announced that it was scaling down its steelmaking operations to a “technical minimum” in Ukraine.
Market participants reacted negatively to the news. Shares plunged nearly 8% on the day of the announcement. Pausing operations in Ukraine would lead to lower production volumes and sales.
According to the company’s 2021 annual report, ArcelorMittal’s Kryvyi Rih operations produced 4.9 million tonnes of steel and 11.7 million tonnes of iron ore last year. The carrying book value of its assets in the country stood at $2.3bn.
Moreover, the management said that operations in the country generated around $4.1bn in revenue, including $0.9bn in sales to customers in Ukraine.
The Russia-Ukraine war has been listed by ArcelorMittal as a risk factor that could disrupt the company’s financial performance.
“Russia’s invasion of Ukraine, international reaction to it (in particular in the form of sanctions) and any regional or global escalation of the conflict, could adversely affect the company’s business, results of operations and financial condition,” stated the company’s risk disclosure.
What could be expected from this mining stock in light of recent developments? In this article, we analyse the latest ArcelorMittal stock news along with its price action and fundamentals to outline plausible scenarios for the future.
ArcelorMittal stock analysis: Technical views and price drivers
The price of ArcelorMittal stock has been on an uptrend for a while now as the price of commodities – steel and iron ore, specifically – has been steadily increasing amid the ongoing global supply chain crisis.
Higher demand for raw materials has favoured the company as the world gets back to normal after the pandemic. In 2021, its share price rose more than 49%.
The ArcelorMittal stock chart above shows that the stock recently broke its 2018 highs, although it retreated shortly afterwards as market participants braced for the beginning of war in Ukraine.
MT stock is currently (23 March) trading 7.3% below its 52-week high and 11% above its 200-day simple moving average (as of 23 March). Meanwhile, momentum indicators are bullish – the relative strength index (RSI) is at a bullish 62.8.
Meanwhile, the moving average convergence divergence (MACD) is in positive territory and above the signal line. Positive momentum histogram readings have been steadily rising.
The trajectory of the price action is positive. Could it tag the upper bounds of the ascending channel highlighted in the chart?
The situation in Ukraine is perhaps the most important price driver. Any advance in peace negotiations could lead to an uptick in ArcelorMittal stock, while any setbacks could push the stock lower.
On the other hand, the price could also be affected by how commodity prices fluctuate throughout the year. The progressive resolution of the supply chain crisis could lead to a drop in steel and iron ore prices. If that happens, analysts could revisit their baseline ArcelorMittal share price predictions and adjust accordingly.
ArcelorMittal fundamental analysis: Latest earnings
On 10 February, ArcelorMittal reported its financial results covering the fourth quarter and entire 2021 fiscal year.
During the three months ended 31 December, the company reported total sales of $20.80bn, resulting in a 2.9% year-on-year jump. The company produced $76.57bn in sales during the 2021 fiscal year – a 43.7% rise to the previous year.
Steel shipments retreated in 2021 to 62.9 million metric tonnes (Mt) compared to 69.1Mt for the previous year. Iron ore shipments also experienced a decline to 26Mt from 28.4Mt in 2020.
Operating income for the year landed at $16.98bn. Net profits moved to $14.96bn, up from the $733m loss the company reported in 2020 amid disruption caused by the pandemic. Earnings per share ended the year at $13.53 compared to minus $0.64 in 2020.
Operating cash flows ended the year at $9.9bn. Free cash flows landed at around $6.6bn.
In 2021, the company repurchased 19% of total diluted shares outstanding. The board of directors proposed an annual dividend of $0.38 a share, with the first instalment scheduled to be paid in June 2022, subject to the approval of shareholders at the annual general meeting in May 2022. Such an amount would result in a 1.2% dividend yield, if approved.
By the end of 2021, the company had $9.9bn in cash and equivalents, including $5.5bn in available credit lines. Average debt maturity stood at 5.8 years.
ArcelorMittal stock projection: Analyst sentiment
Are ArcelorMittal shares a ‘buy’, ‘sell’ or ‘sell’? According to data compiled by MarketBeat (as of 23 March), the consensus recommendation for ArcelorMittal’s stock was bullish, with nine of 11 analysts rating the stock a ‘buy’, one rating it a ‘sell’ and one a ‘hold’.
The average ArcelorMittal share price target for the company’s American Depositary Receipts (ADRs) stood at $43.58, giving 29.5% upside potential, based on yesterday’s closing price of $33.65. The highest 12-month ArcelorMittal stock forecast from analysts was $52 and the lowest $30.89.
Analysts have taken a few actions on ArcelorMittal stock lately. On February 2, Credit Suisse boosted its price target to $50, up from a previous 12-month ArcelorMittal share price forecast of $42.
In January, Goldman Sachs downgraded the stock from ‘buy’ to ‘neutral’, while Deutsche Bank lowered its price target by $3 to $52.
Commenting on the ArcelorMittal (MT) share price forecast, Mikhail Karkhalev, analyst at Capital.com, said:
ArcelorMittal (MT) share price forecast: Targets for 2022, 2025 and 2027
Meanwhile, several algorithm-based forecasting services provided mixed predictions for ArcelorMittal’s American Depositary Receipts (ADRs), as of 23 March.
Wallet Investor indicated that the outlook in the short-term was moderately bullish, based on an assessment of multiple technical indicators. The service suggested that the price could rise to $34.96 by the end of 2022.
Wallet Investor believed in a positive ArcelorMittal stock potential and predicted that the price could hit $38.07 by the end of 2025. Although the service did not provide targets for 2030, its five-year MT stock forecast suggested the price to trade at an average of $37.40 in March 2027.
Gov Capital expected that the Arcelormittal stock future price could either stay flat or decline significantly to the $22.88 level by the end of 2022 and to less than $10 by March 2024.
When looking for the ArcelorMittal (MT) stock forecasts, it’s important to bear in mind that analysts’ predictions can be wrong. They’re based on an analysis of the ArcelorMittal share price history. Past performance never guarantees future results.
It’s important to do your own research. Your decision to trade depends on your attitude to risk, your expertise in the market, the spread of your portfolio and how comfortable you feel about losing money. You should never trade more than you can afford to lose.
FAQs
Are ArcelorMittal shares a good buy?
ArcelorMittal is a mining company with a robust balance sheet and a solid profit and cash-flow generation capacity. The company is undergoing a difficult situation amid the Ukraine-Russia military conflict that is jeopardising a portion of its revenues. This remains a relevant factor to watch in the future as any negative developments on this front could affect the valuation of the business.
Will ArcelorMittal shares go up or down?
Forecasts were mixed,as of 23 March. Traders are encouraged to take a closer look at the technical and fundamental variables to form their own opinions about the ArcelorMittal stock future price before investing.
How high can ArcelorMittal stock go?
According to estimates from Wallet Investor (as of 23 March), ArcelorMittal’s stock could rise to $38 in the next three years.
Why has the ArcelorMittal share price been rising?
Higher commodity prices – specifically for iron ore and steel – have been responsible for lifting the price of ArcelorMittal in the past 15 months as the company benefits directly from this dynamic in the form of higher revenues and profits.
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