ArcelorMittal falls after BofA downgrades European steel sector

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ArcelorMittal falls after BofA downgrades European steel sector
Credit: © Reuters.

By Geoffrey Smith -- ArcelorMittal (AS: MT ) (NYSE: MT ) stock fell over 4% in European trading on Wednesday, after analysts at Bank of America cut their forecasts for a handful of European steelmaking stocks.

The analysts cut their recommendation for the world's largest steelmaker to 'neutral' from 'buy' on valuation grounds, after a sharp relief rally in recent weeks as the threat of energy rationing this winter across Europe has receded.

The new price target of €28 a share left only around 10% upside from Tuesday's close.

The analysts said an 'underperform' rating wasn't appropriate, given that the "valuation is not demanding and we consider the possibility for the company to announce more share buybacks which could maintain the share price around current levels even in the face of earnings downgrades."

The company has a history of relatively shareholder-friendly policies, they added.

By 09:45 ET (14:45 GMT), ArcelorMittal stock was down 4.4% on Euronext, making it the worst performer in both the CAC 40 and AEX indices.

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