A major reassessment is underway at JPMorgan, with the prominent US investment bank making a substantial revision to its outlook for Austrian steel and technology group Voestalpine. The firm has not only elevated its rating to “Overweight” from “Neutral” but has also aggressively increased its price target from EUR 30.10 to EUR 40.60. This new target implies a potential gain of more than 30 percent from previous levels, a projection that is capturing market attention. This raises a critical question: after two years of weak steel prices, is Voestalpine positioned for a genuine recovery?
The foundation for this optimistic view appears to rest on a confluence of several positive factors, creating a powerful tailwind for the company’s prospects.
Robust Financial Health Provides Strategic Flexibility
Recent quarterly results demonstrate Voestalpine’s operational resilience in a challenging climate. For the first quarter of the 2025/26 fiscal year, the company generated a free cash flow of EUR 188 million. This was achieved even as revenues saw a slight decrease to EUR 3.9 billion.
A key highlight is the reduction in the gearing ratio to 19.4 percent, marking the lowest leverage level since the 2006/07 financial year. This strong balance sheet affords management significant strategic freedom, particularly for making essential investments in the green transformation of its steel production processes. The upcoming Q2 results, scheduled for November 12th, will serve as an important indicator of whether this positive operational trend is sustainable. The stock has already advanced impressively, gaining over 77 percent since the start of the year, prompting investors to consider if this is merely the beginning of a longer rally.
A Resurgent Automotive Sector as the Primary Catalyst
Central to JPMorgan’s thesis is the anticipated recovery in the automotive industry. Approximately 40 percent of sales from Voestalpine’s steel division are linked to the auto sector, and a turnaround is now taking shape. Following two consecutive years of price declines exceeding 10 percent annually, European steel producers are now aiming to implement price increases of approximately EUR 100 per tonne.
Should investors sell immediately? Or is it worth buying Voestalpine?
Market experts anticipate initial signs of improved pricing power, especially in annual contracts with European automobile manufacturers that will become effective from January 1, 2026. For Voestalpine, a leading supplier of high-quality strip steel with a strong global position among automotive makers, this shift could act as a crucial financial lever.
A summary of JPMorgan’s revised forecasts:
* Rating: Upgraded to “Overweight” from “Neutral”
* Price Target: EUR 40.60 (raised from EUR 30.10)
* EBITDA Growth 2026: Approximately 15% versus 2025
* EBITDA Growth 2027: Roughly 35% versus 2025
The Overlooked Strength of the Railway Division
An element many investors may be underestimating is the performance of Voestalpine’s railway business, which is emerging as a consistent standout. JPMorgan specifically highlighted the company’s “undervalued exposure” to this sector. The projections are compelling: for the 2026 fiscal year, analysts estimate this segment alone will generate an EBITDA of EUR 220 million.
Applying an industry-standard valuation multiple of 8x EV/EBITDA, this division could be worth approximately EUR 1.88 billion. The Railway Systems business is a direct beneficiary of substantial infrastructure investments currently underway, particularly in Europe and North America. This positions the segment as a stable growth engine that the market has yet to fully appreciate.
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