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B.Riley upgraded Hudson (NYSE:HUD) Technologies (NASDAQ:HDSN) from Neutral to Buy on Monday, raising its price target to $9.00 from $7.50 as refrigerant pricing shows signs of recovery. The upgrade aligns with InvestingPro analysis, which rates Hudson’s financial health as "GREAT" with a robust overall score of 3.07. The company currently appears undervalued according to InvestingPro’s Fair Value model.
The firm’s channel checks indicate that HFC refrigerant prices are beginning to increase with the arrival of peak cooling season. While HFC prices at the end of the first quarter were below $6 per pound, representing a 40% year-over-year decline, B.Riley believes current prices have rebounded to over $7 per pound. The company’s strong financial position, with a current ratio of 3.84 and minimal debt-to-equity of 0.03, provides stability during market fluctuations.
The price improvement aligns more closely with the approximately $7.50 per pound realized in the second quarter of 2024. B.Riley notes that pricing has likely been affected by tariff-related supply constraints and tightening availability of newer refrigerants such as 454B and R-32, which are driving increased aftermarket demand.
Hudson Technologies’ management anticipates a 3% to 5% year-over-year volume increase in 2025. This growth will be supported by expanded sourcing and distribution capabilities from the USA Refrigerants acquisition completed in the second quarter of 2024.
The acquisition is expected to position Hudson Technologies for a return to year-over-year revenue growth in the second half of 2025 against more favorable comparisons, though B.Riley acknowledges that the long-term sustainability of the pricing recovery remains uncertain.
In other recent news, Hudson Technologies announced its first-quarter earnings for 2025, showing mixed results. The company reported earnings per share (EPS) of $0.06, missing analyst expectations of $0.08, while revenue exceeded forecasts, reaching $55.3 million against the expected $53.9 million. Despite a 15% year-over-year revenue decline, Hudson Technologies maintains a strong cash position with $81 million and no debt. Canaccord Genuity responded to the earnings report by maintaining a Hold rating on Hudson Technologies and raising its price target to $6.75 from $6.25. This adjustment reflects optimism due to the company’s sales volume growth, despite ongoing pricing challenges in the refrigerant market. Hudson Technologies is exploring acquisition opportunities to leverage its cash reserves, with a focus on small to mid-sized distributors and HVAC service providers. The company is also considering utilizing the remaining $5.5 million in its share repurchase program. Investors are keeping a close watch on the refrigerant pricing environment and potential strategic moves by Hudson Technologies.
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