Mizuho downgrades Tronox stock to Underperform on unwarranted price surge

Investing.com - Mizuho downgraded Tronox (NYSE:TROX) from Neutral to Underperform on Friday, setting a price target of $4.00, which represents a 20% downside from current levels. According to InvestingPro data, the stock has seen a significant 11.6% return over the last week, despite analyst consensus remaining cautious with a 2.38 rating.

The research firm cited an "unwarranted" approximately 55% increase in the stock price since the company’s last quarterly report and dividend cut, compared to the S&P Materials index’s gain of about 5.0% during the same period.

Mizuho expressed concern that the stock could retest previous lows or fall further as fundamentals do not appear to be improving for the pure-play producer of titanium dioxide pigment, which is primarily used in house paint, paper, and plastics.

The firm noted that major house paint manufacturers have guided to lower raw material prices in the second half of 2025, with titanium dioxide being the largest ingredient in house paint.

Mizuho also highlighted Tronox’s elevated debt levels, pointing out that the company’s net debt-to-EBITDA ratio for the next twelve months stands at approximately 7x, significantly higher than the company’s more typical target of around 2x.

In other recent news, Tronox Holdings PLC reported disappointing financial results for the second quarter of 2025, with earnings per share (EPS) significantly missing analyst forecasts. The company posted an EPS of -$0.28, compared to the expected -$0.04, resulting in a 600% negative earnings surprise. Revenue also fell short of expectations, coming in at $731 million against a forecast of $790.22 million. Additionally, Tronox announced that Julie Beck, a member of its Board of Directors and Audit Committee, will resign from the board effective September 30, 2025. Her resignation follows her recent appointment as Senior Vice President, Chief Financial Officer, and Treasurer of MSA Safety Incorporated. The company stated that the time commitments required by her new position led to her decision to step down. These developments highlight significant changes and challenges for Tronox as it navigates its financial performance and leadership transitions.

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