Jefferies raised its recommendation on Salzgitter to Buy from Hold and increased its price target by 20% to 66 euros from 55 euros, arguing the steel producer stands to gain from a combination of more restrictive European Union import quotas, firmer EU steel prices and expected German infrastructure spending from 2027 onwards.
Analyst Cole Hathorn wrote that Salzgitter is "a key beneficiary of more protectionist EU steel quotas, higher EU steel prices and Germany’s infrastructure spending from 2027 onwards," noting the company’s heavy exposure to the European market. Jefferies highlights that 76% of Salzgitter’s sales are in Europe, with 42% in Germany, and says the company has the most earnings leverage to rising steel prices among its coverage.
Market reaction was immediate: Salzgitter shares jumped in European trading, rising 6.7% by 09:30 GMT. At the time of the intraday quote included in the reporting, the stock was listed at 54.725 euros, up 3.325 euros or 6.47% in real-time data.
Jefferies set out specific sensitivities for the company’s steel production business. The brokerage estimates that every 5% increase in volumes would add 60 million euros to EBITDA. Using an expected shipment figure of 5.7 million tonnes of steel in 2027, Jefferies calculates that each 50-euro-per-tonne uplift in steel prices is worth about 285 million euros in EBITDA, or 185 million euros when excluding longer-term contracts.
On the basis of its price and volume assumptions, Jefferies lifted its 2026 EBITDA estimate by 1% to 727 million euros, which it says is 5% above the Bloomberg consensus of 693 million euros. For 2027, the broker increased its EBITDA forecast by 12% to 1.031 billion euros, a projection it notes is 18% higher than the consensus figure of 874 million euros.
Jefferies also outlined its assumptions for hot rolled coil prices, forecasting a rise to a range of 750 to 800 euros per tonne in the fourth quarter of 2026 through 2027. The firm expects a 2027 average of 763 euros per tonne, compared with a current spot price of 701 euros quoted in the note.
These forecasts place Jefferies’ outlook above the company’s own guidance. In April, Salzgitter raised its EBITDA guidance to a range of 625 million to 725 million euros and set an EBT range of 200 million to 300 million euros. Jefferies’ model sits above the top end of that company guidance and the broker suggested there is scope for further upgrades, indicating room for Salzgitter to raise its outlook again "by >€50m to €675-800m EBITDA."
Performance year-to-date has been strong: Salzgitter shares are up 28% since the start of the year, outpacing the STOXX Europe 600 steel index gain of 15%. The stock has, however, come under some pressure over the past month amid a related 30% stake sale in Aurubis, a development Jefferies says contributed to a recent pullback and presents what the analyst described as "an opportunity to turn more constructive on this mid-cap steel stock."
Jefferies’ upgrade and elevated forecasts rest on the combination of tighter EU import measures, an assumed recovery in EU steel prices and the potential for improved mill operating rates and volumes. The broker quantifies both price and volume sensitivities, and positions its estimates relative to consensus and the company’s own guidance.
Investors and market participants will watch whether Salzgitter can convert those forecast sensitivities into reported results and whether the company chooses to revise its guidance upwards in line with the broker’s projections.