SSAB A: Fossil Free Steel Partnerships Will Drive Margins And Shareholder Returns

Analysts have modestly trimmed their price target on SSAB, nudging it down by SEK 2 to SEK 73. They are balancing slightly softer valuation assumptions with still constructive expectations for revenue growth and improving profit margins.

Analyst Commentary

Recent Street research reflects a generally constructive stance on SSAB, with bullish analysts emphasizing the company’s solid execution and earnings power despite minor downward tweaks to price targets. The latest adjustment to SEK 73, from SEK 75 and SEK 77 previously, is framed less as a shift in conviction and more as a calibration to reflect updated sector assumptions and macro inputs.

JPMorgan, which maintains an Overweight rating, underscores that SSAB still offers an attractive risk reward profile at current levels. Even after the lower target, their valuation implies upside, supported by expectations for resilient demand, disciplined cost control, and continued progress on higher value added steel grades and sustainability linked offerings.

While there has been at least one move to a more neutral stance with a SEK 70 target, the broader message from bullish analysts is that SSAB remains well positioned within the European steel space. They highlight the company’s balance sheet, cash generation, and potential for shareholder returns as key buffers against cyclical volatility.

Bullish Takeaways

• Despite modest target trims, bullish analysts still see upside to the current share price, arguing that SSAB trades at a discount to its long term earnings potential and to peers on key valuation multiples.
• Execution on efficiency measures and product mix upgrades is viewed as a structural positive that can support margins through the cycle. This is cited as helping to justify an Overweight stance even under more conservative assumptions.
• Ongoing investments in premium and low carbon steel offerings are seen as important growth drivers, with the potential to support higher pricing power and multiple expansion over time.
• Cash flow generation and balance sheet flexibility are cited as catalysts for potential capital returns, with bullish analysts pointing to buybacks and dividends as additional support for the equity story.

What's in the News

• SSAB entered a partnership with EAB to supply fossil free steel, including SSAB Zero, for use in EAB's core businesses of warehouse fittings, doors, and steel buildings. This extends an existing application in the chassis of EAB's Radioshuttle warehouse management system (Key Developments).
• SSAB signed an agreement with Vattenfall to deliver 120 tonnes of fossil free steel for what is set to become the world's first and largest dam gate produced with near zero fossil carbon dioxide emissions in the ironmaking process, using pilot fossil free sponge iron developed through the HYBRIT initiative with Vattenfall and LKAB (Key Developments).

Valuation Changes

• Fair Value increased from SEK 80.0 to SEK 90.0, marking a meaningful upward revision to the intrinsic value estimate.
• Discount Rate rose moderately from 5.70 percent to about 6.41 percent, reflecting a slightly higher required return in the valuation model.
• Revenue Growth was nudged up from roughly 5.95 percent to about 6.63 percent, indicating a modestly more optimistic top line outlook.
• Net Profit Margin was raised from around 7.49 percent to approximately 9.72 percent, implying a significant upgrade to expected profitability.
• Future P/E was lowered from about 10.65x to roughly 9.39x, suggesting a somewhat more conservative earnings multiple despite higher fair value.