KeyBanc Capital Markets Upgrades PolyOne to Buy

KeyBanc Capital Markets has published a research report on PolyOne Corporation POL and has upgraded the company from Hold to Buy as KeyBanc believes the company has attractive long-term qualities. In the report, KeyBanc writes, "We are upgrading shares of POL to BUY from HOLD and establishing a 12-month price target of $17 based on a 2012E EV/EBITDA of 7.0x or a 2012E P/E of 15.5x. Our incremental positivity on the stock is driven by our view that POL: 1) has attractive cyclical upside potential longer term, particularly as construction demand stabilizes and recovers; 2) will post strong EBITDA growth (+25%) in 2012E vs. 2011E with a good portion coming from its acquisition of ColorMatrix; and 3) will post margin improvement despite volume pressures from production rationalization and productivity initiatives. While the inflection point in volumes and earnings will not occur till 2H12E, signaling the next catalyst for the stock a few quarters away, we believe POL's risk/reward is attractive, with the stock trading at the lower end of our forecasted 12-month range and the weaker 1H12E largely discounted. In addition, we believe the current WLK hostile bid for GGC will support some multiple expansion for POL given it has a more specialized plastics portfolio of businesses." KeyBanc Capital Markets has established a $17 price target on PolyOne, which is currently trading up $0.32 from yesterday's $12.74 closing price.