UBS upgrades Chemours to Buy, raises target to $30

On Tuesday, UBS has upgraded shares of Chemours (NYSE:CC) from Neutral to Buy, adjusting the price target upward to $30 from the previous $28. The change comes after a period of notable underperformance by the stock, which has seen a 22% decrease over the last month and a half, compared to a 5% decline in the broader materials sector.

The analyst from UBS indicated a positive outlook for Chemours, suggesting that the market's current stance on the stock might be overly pessimistic. They pointed to expected improvements in the company's earnings from titanium dioxide (TiO2) operations and anticipated favorable demand and price dynamics in the refrigerants market leading up to 2025.

Despite expectations of a choppy near-term performance, 2024 is seen as a pivotal year for Chemours. The UBS analyst projects that the company could generate approximately $1.2 billion in EBITDA in 2025, which would mark a 46% year-over-year increase and is about 5% higher than the consensus. Furthermore, the analyst forecasts that earnings could grow to over $1.5 billion in EBITDA longer-term, resulting in a compound annual growth rate (CAGR) of around 12% from a higher base in 2025.

Management changes at Chemours have also been highlighted as a positive development, having addressed concerns related to accounting risks. With these concerns mitigated, the focus for the stock has shifted towards the company's execution, recovery, and growth potential in the refrigerants and coolants markets.

The upgrade to a Buy rating and the price target increase to $30 implies an estimated 35% upside from the current levels, signaling UBS's confidence in Chemours' future performance.

In other recent news, Chemours Co. has experienced a series of noteworthy developments. The company's first-quarter 2024 financial results showed a decline in net sales by 6% to approximately $1.4 billion, and consolidated adjusted EBITDA fell by 37% to $193 million. However, the Titanium Technologies segment met top-line expectations, with adjusted EBITDA surpassing forecasts due to strategic volume allocations and cost reductions.

In addition, Chemours Co. has expanded its board with the appointment of Livingston "Tony" Satterthwaite, and announced Shane Hostetter as its new Chief Financial Officer. The Texas energy industry, including Chemours Co., is on high alert due to the approaching Storm Beryl, which is expected to disrupt operations.

Analysts from Barclays, BMO Capital Markets, and UBS have provided price targets for Chemours, based on the company's recent developments, including the anticipated recovery in TiO2 volumes and strategic cost reductions.

InvestingPro Insights

Following the UBS upgrade of Chemours (NYSE:CC), the InvestingPro platform provides additional insights that may interest investors. Notably, Chemours has a market capitalization of $3.32 billion, which reflects its standing in the industry despite recent market challenges. The company's aggressive share buyback strategy, as highlighted by one of the InvestingPro Tips, indicates a management confident in the company's value. Moreover, with net income expected to grow this year, Chemours appears poised to capitalize on favorable market conditions and internal efficiency measures.

On the financial health side, Chemours is currently trading at a high Price / Book multiple of 4.42, which could be a point of consideration for value-focused investors. However, the company's revenue of $5.841 billion over the last twelve months, as of Q1 2024, shows substantial business scale. Additionally, the company's dividend yield stands at 4.48%, a figure that income investors might find attractive, especially in a low-interest-rate environment.

For those interested in further details, InvestingPro offers additional tips on Chemours, which can be accessed through the platform's dedicated page for the company. To enhance your investing strategy with these insights, you can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. With a total of 8 additional InvestingPro Tips available, investors can gain a more comprehensive understanding of Chemours' financial landscape and market potential.

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