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On Wednesday, BMO Capital Markets raised their assessment of Ingevity Corp (NYSE:NGVT), shifting from a "Market Perform" to an "Outperform" rating while also increasing the price target to $65.00, up from the previous target of $62.00. The new target aligns with the broader analyst consensus, as InvestingPro data shows analyst targets ranging from $45 to $66. With a market capitalization of $1.7 billion and notably volatile stock movements, this adjustment reflects a more optimistic outlook on the company’s future financial performance.
The upgrade comes after a period of observation during which BMO Capital noted positive developments within Ingevity, including significant improvements in the company’s projected earnings per share (EPS) and free cash flow (FCF) for the years 2025 and 2026. While InvestingPro data indicates the company wasn’t profitable over the last twelve months, analysts forecast EPS of $4.79 for FY2025, supporting BMO’s optimistic outlook. The decision to upgrade was initially postponed to observe the impact of the company’s new CEO and to gauge the potential risks of auto-related tariffs.
The presence of an activist investor, Vision One, within Ingevity has also influenced BMO Capital’s revised stance. Analysts believe that with Vision One’s involvement, shareholders may have a safeguard against downside risks. Additionally, this could amplify the benefits from Ingevity’s anticipated growth in EPS and FCF.
The analyst’s commentary highlighted the strategic change, stating, "We are upgrading NGVT to OP and raising our PT to $65 (with a SOTP that points solidly higher)." The commentary suggests that the sum of the parts valuation supports the higher price target.
Ingevity’s recent corporate changes and the improved financial outlook have contributed to the more favorable rating. BMO Capital’s analysts expect that shareholders will not only be shielded from potential negative impacts but will also potentially benefit from the company’s positive momentum moving forward.
In other recent news, Ingevity Corporation has reported record sales and EBITDA for its Performance Materials segment in 2024, with margins exceeding 50%. The company’s strategic repositioning efforts, particularly in the Performance Chemicals division, have led to significant cost optimizations and enhanced cash flow. Ingevity is also exploring strategic alternatives for its Industrial Specialties product line and North Charleston CTO refinery, aiming to focus on higher growth and margin opportunities. Preliminary financial results for fiscal year 2024 indicate expected net sales of approximately $1.40 billion, aligning with consensus forecasts, and an anticipated adjusted EBITDA of around $360 million. Analyst firm BMO Capital Markets has raised its price target for Ingevity to $62, maintaining a Market Perform rating, citing improved risk/reward balance and potential for enhanced free cash flow. The company has achieved $84 million in savings from its Performance Chemicals repositioning actions, surpassing its target. Ingevity’s ongoing strategic review is expected to conclude by the end of the year, with the company planning to communicate its direction once finalized. Additionally, Ingevity has refreshed its Board of Directors, adding new members to support its strategic initiatives.
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