Morgan Stanley moved Aperam to an "equal-weight" recommendation from "overweight," a shift that coincided with a more than 3% sell-off in the stainless steel producer's shares on Tuesday. The brokerage raised its price target for the Luxembourg-based company to €52 from €48 even as it pared back its rating, arguing that the upside from Europe's initial stainless steel cyclic recovery is now largely captured in current estimates and valuations.
Re-rating and market momentum
In its note, Morgan Stanley said the first leg of Europe’s stainless recovery is "largely reflected in estimates and valuation," prompting the downgrade after a recent re-rating of Aperam's stock. The analysts acknowledged that a European stainless structural reset "remains intact, supported by policy," but warned that price and spread momentum has paused.
The broker pointed to marked reductions in European stainless imports, which it said fell 40% year-on-year in the first quarter and were down 49% quarter-to-date in the second quarter. It also noted that quota utilization averaged below 50%, a factor that has narrowed the immediate effect of stricter safeguard measures scheduled to take effect on July 1.
On pricing, Morgan Stanley stated that European stainless prices have rebounded 22%, equivalent to €518 per metric ton, from a September 2025 trough, while spot spreads have climbed 18%. However, the pace of price increases has slowed since March and prices plateaued in May, the note said.
Earnings and balance sheet outlook
The brokerage judged Aperam’s stated normalized EBITDA objective of €700-800 million to be "broadly reflected" in both 2027 and 2028 consensus and in Morgan Stanley’s own models. Its forecasts see Aperam generating EBITDA of €481 million in 2026, rising to €717 million in 2027 and €794 million in 2028. Those figures compare with consensus estimates of €513 million, €714 million and €788 million, respectively.
On an earnings-per-share basis, Morgan Stanley projected €2.20 for 2026, increasing to €4.39 in 2027 and €5.16 in 2028. The brokerage also anticipated net debt to decline to €414 million in 2028 from €978 million in 2025.
Valuation framework and scenarios
Morgan Stanley set its base-case price target using an EV/EBITDA approach, applying a target multiple of 6.4 times the average estimated 2027-28 EBITDA, a multiple it said aligns with the historical average of Aperam’s closest peers. The bank left Aperam’s bear case unchanged at €19 per share and lifted its bull case to €72 from €67.
The note also referenced analyst consensus data showing a price target range for Aperam of €30 to €65, with 33% of analysts rating the stock "overweight," 50% "equal-weight" and 17% "underweight."
Relative preference for Acerinox
Morgan Stanley said it now sees more medium-term upside in Acerinox, which it maintains as "overweight." The rationale cited is Acerinox’s exposure to the U.S. stainless market, where spreads continue to trade around 20% above European levels. The broker lifted its Acerinox price target to €18.40 from €15.50.
Market reaction and forward-looking considerations remain tied to the evolution of prices, spreads and quota execution, according to the brokerage.