UBS has downgraded German steelmaker Salzgitter AG to Neutral from Buy, citing valuation concerns after the stock doubled since September. The investment bank raised its price target to €52 per share, a 4% increase, following a site visit to its 4.7 million tonne mill and meetings with management.

Salzgitter trades at roughly 9x EV/EBITDA for 2026 estimates, which UBS considers expensive. The bank’s analysis values the company on a 50/50 split of discounted cash flow and a 5.5x 2027 target EV/EBITDA. This includes Salzgitter’s approximately 30% stake in Aurubis, which remains UBS’s top European steel pick.

Management discussed a potential portfolio break-up but plans to keep KHS for earnings diversification. A key decision looms for HKM, a joint venture with Thyssenkrupp and Vallourec. Salzgitter is considering converting the blast furnace slab producer into a 2 million tonne electric arc furnace alone, a move requiring significant capital expenditure.