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On Thursday, RBC Capital Markets adjusted its outlook on Rayonier Advanced Materials (NYSE:RYAM) shares, increasing the price target to $9 from the previous $7, while maintaining an Outperform rating on the company's stock. This change follows Rayonier (NYSE:RYN)'s recent financial performance, which surpassed analyst expectations.
Rayonier Advanced Materials reported an Adjusted EBITDA of $68 million, which was significantly higher than RBC Capital's forecast of $40 million and the FactSet consensus (excluding RBC) of $46.6 million.
The company's financial results were bolstered by an unexpected $10 million benefit from the Canada Emergency Wage Subsidy (CEWS), with the associated cash having been received in the previous year.
RBC Capital's analysis suggests that Rayonier Advanced Materials could see further upside if it successfully refinances and sells its Paperboard and High Yield (HY) Pulp business. The firm's continued endorsement of an Outperform rating reflects confidence in the company's potential for growth and value creation.
The analyst at RBC Capital highlighted the unexpected benefit from CEWS as a contributor to the stronger quarter, emphasizing the impact of such subsidies on the company's financial health. This support, coupled with the company's operational performance, has led to the raised price target.
In summary, RBC Capital Markets has responded to Rayonier Advanced Materials' stronger-than-anticipated earnings and the positive impact of government subsidies by raising the price target for the company's shares. The firm reiterates its positive stance on Rayonier's stock, underlining the potential for increased value through strategic financial maneuvers and asset sales.
InvestingPro Insights
In light of RBC Capital Markets' recent price target increase for Rayonier Advanced Materials, current InvestingPro data provides further context for investors. The company's market capitalization stands at approximately $478.71 million, reflecting its size and market value within the industry. Despite challenging conditions, Rayonier Advanced Materials has exhibited a significant return over the last week, with an 11.11% price total return, which aligns with its strong performance over the past month and three months, boasting returns of 34.69% and 79.36%, respectively.
InvestingPro Tips suggest that management's aggressive share buyback strategy and high shareholder yield are key factors to consider. These actions indicate a management team that is confident in the company's value and committed to returning capital to shareholders. While analysts do not expect the company to be profitable this year, and the company has been grappling with weak gross profit margins of 7.58%, the substantial returns over various periods and the stock trading near its 52-week high suggest a positive market sentiment.
For investors seeking a deeper dive into Rayonier Advanced Materials' potential, there are additional InvestingPro Tips available, which can provide a more comprehensive analysis of the company's performance and outlook.
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