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On Thursday, Mizuho (NYSE:MFG) Securities adjusted its outlook on TRONOX (NYSE:TROX), a manufacturer of titanium dioxide and zircon products, by reducing the price target to $11 from the previous $12 while keeping a Neutral rating on the stock. This change comes after the company provided its earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance for the first quarter of 2025, which showed figures below market expectations. According to InvestingPro data, TRONOX is currently trading below its Fair Value, with analyst targets ranging from $11 to $19, suggesting potential upside despite recent challenges.
TRONOX’s EBITDA guidance for the first quarter of 2025 is set between $525 million and $625 million, with a midpoint of $575 million. This forecast falls short of the $695 million and $664 million previously estimated by Morgan Stanley (NYSE:MS) USA and the consensus of analysts surveyed by Bloomberg. Despite the lower guidance, TRONOX reported a 37% year-over-year increase in adjusted EBITDA for the fourth quarter of 2024, reaching $129 million, which was in line with Morgan Stanley USA’s estimate and slightly above the consensus. InvestingPro analysis reveals that TRONOX maintains a significant 5.09% dividend yield and has consistently paid dividends for 13 consecutive years, demonstrating strong shareholder returns despite market volatility.
The company’s performance was bolstered by stronger-than-anticipated results in the zircon market, which helped counterbalance a modest shortfall in titanium dioxide (TiO2) volumes. Geographically, the Asia Pacific region outperformed expectations, which mitigated a slight underperformance in Europe. However, the price and mix for TiO2 declined by 1% quarter-over-quarter, and there was an 8% quarter-over-quarter decline for co-product zircon. The company maintains a healthy financial position with a current ratio of 2.72, indicating strong liquidity to meet short-term obligations.
In light of these factors, Mizuho has revised its EBITDA projections for 2025 and 2026 to $576 million and $679 million, respectively, down from the previous estimates of $695 million and $789 million. The reduction in the price target to $11 reflects these updated earnings expectations. The firm’s decision to maintain a Neutral rating indicates a cautious stance on the stock’s prospects. For a deeper understanding of TRONOX’s valuation and prospects, InvestingPro subscribers can access comprehensive financial health scores and additional ProTips that provide valuable insights into the company’s future potential.
In other recent news, titanium dioxide producer TRONOX received a Buy rating from Truist Securities, with a price target set at $17.00. This initiation reflects Truist Securities’ belief in TRONOX’s robust competitive position within the industry, driven by its scale and high degree of vertical integration. The firm’s analyst also highlighted the potential implementation of anti-dumping duties targeting Chinese exports, which could further strengthen TRONOX’s market position.
The analyst expressed optimism regarding the improving fundamentals of the titanium dioxide market, expecting TRONOX to capitalize on this momentum. An anticipated improvement in TRONOX’s operating rates is predicted to support significant earnings upside. The company’s ability to outperform the market in terms of volume growth, under favorable market conditions, is expected to be a catalyst for its earnings. These are among the recent developments that have shaped TRONOX’s direction.
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