Baltimore: American shares of ArcelorMittal, the world's largest steel company, rose Friday after an analyst upgraded the stock and said ArcelorMittal is less vulnerable than its peers to higher steel costs.
Baltimore: American shares of ArcelorMittal, the world's largest steel company, rose Friday after an analyst upgraded the stock and said ArcelorMittal is less vulnerable than its peers to higher steel costs.
Deutsche Bank (nyse: DB) David Martin raised his rating on the Luxembourg-based company to "Buy" from "Hold," and raised his price target for American Depositary Receipts of ArcelorMittal to $90 per share from $72. In afternoon trading, the ADRs rose $1.33 to $76.86.
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ArcelorMittal owns more of its own supply chain than nonintegrated steel companies do, Martin said. That means the company will feel a smaller pinch from higher costs for key materials like iron ore and coal and higher supply costs in important markets.
Those costs will have a greater effect on ArcelorMittal's rivals, he wrote. Martin forecast large increases in the price of hot-rolled coil steel, iron ore and coking coal, and said nonintegrated companies will have to pay $140 more per ton of steel than they did in 2007.
"We prefer integrated companies and ArcelorMittal's iron ore and coke integration should help it outperform peers in 2008," he said.
He added that he is less concerned about profit margins in European and North American markets because ArcelorMittal has raised its prices, and will save money due to restructuring.
The Bank of New York (nyse: BK) Europe ADR Index - which tracks shares of companies based in Luxembourg, Ireland, Hungary and more - wobbled in late trading, edging up 0.25 points to 168.44.
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