Oct. 29 (Bloomberg) -- ArcelorMittal’s shares are primed to rebound as European manufacturing emerges from an almost two-year slump, spurring demand for output from the world’s biggest steelmaker, according to Macquarie Group Ltd.
The CHART OF THE DAY shows how a recovery in the Eurozone Manufacturing PMI Markit Survey Ticker drove the gap between the index and ArcelorMittal’s share price to the most since Lakshmi Mittal took over Arcelor SA in 2006. Monthly car sales rose the most in more than two years in September as a recession ended.
“For the first time in a number of years there’s tangible visibility for an improvement in the earnings outlook,” Jeff Largey, an analyst at Macquarie, said in London. “It’s probably too early to say whether we’re off to the races, but I would say it looks like we’re moving into an upswing.” Profit is probably reaching a trough, with a rebound seen next year, he said.
Largey has an outperform rating on ArcelorMittal’s shares and a 14 euro price estimate. That’s an increase of 24 percent from yesterday’s 11.295 euro close in Amsterdam trading.
ArcelorMittal cut its 2013 earnings forecast in August on weaker-than-expected demand in the U.S. and Europe. European steel-industry shares have declined 4.3 percent in 2013, the second-worst among 37 industry groups tracked by Bloomberg.
The European PMI survey crossed a level of 50 in July for the first time in two years. That signifies an expansion of manufacturing compared with the previous month.
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