Solstice Advanced Materials stock initiated at RBC with Sector Perform

Investing.com - RBC Capital initiated coverage on Solstice Advanced Materials Inc. (NASDAQ:SOLS) with a Sector Perform rating and a $50.00 price target on Monday. The stock currently trades at $47.49, with a market capitalization of $7.54 billion, according to InvestingPro data.

The research firm cited several factors for its neutral stance, including weaker end market growth following recent peak growth from HFO step-downs and opportunistic AES sales.

RBC also pointed to low operating leverage that is expected to drive approximately 6% EPS CAGR on mid-single digit percentage top-line growth, comparing this unfavorably to DuPont’s higher single-digit to low double-digit percentage growth.

The firm established fourth quarter 2025 EBITDA estimates at $182 million, with full-year 2025 EBITDA at $950 million and 2026 EBITDA at $1.0 billion. RBC’s EPS estimates were set at $0.60, $2.09, and $2.56 for the same periods, respectively. InvestingPro data shows the company’s last twelve months EBITDA at $986 million, with analysts forecasting FY2025 EPS at $2.48.

RBC’s $50 price target is based on a 9.0x multiple of its fiscal year 2026 EBITDA estimate, with the firm noting that Solstice appears to be trading near fair value at current levels of approximately 8.0-8.5x FY26E EBITDA. This assessment aligns with InvestingPro Fair Value calculations, which suggest the stock is slightly overvalued with a current EV/EBITDA ratio of 7.45x. InvestingPro Tips also indicate the stock is in overbought territory based on RSI, despite its significant 7.91% return over the last week.

In other recent news, Solstice Advanced Materials has been included in the S&P 500 index, a significant development for the company. This change will take effect before market open on October 31, following the planned spinoff from Honeywell International, which is expected to complete on October 30. In analyst updates, UBS initiated coverage of Solstice Advanced Materials with a Buy rating, setting a price target of $62.00. UBS views Solstice as having a unique collection of businesses with significant exposure to growth sectors such as refrigerants, electronics, and nuclear fuel. Meanwhile, Mizuho also initiated coverage with a Neutral rating and a $54.00 price target, noting the company’s position as a leading fluorochemicals producer. Mizuho highlighted Solstice’s low leverage and lack of major liabilities related to PFAS. These recent developments reflect a growing interest and confidence in Solstice Advanced Materials from both the market and analysts.

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