UPDATE: Bank of America Upgrades Rockwood Holdings On Lithium Business

In a report published Friday, Bank of America Merrill Lynch analyst Aleksey Yefremov upgraded Rockwood Holdings

from a Neutral rating to a Buy rating and raised the price target to $86.00. In the report, Bank of America Merrill Lynch says "We think that the company's lithium business (57% of PF EBITDA) is in the early stages of a multi-year earnings upcycle. Rockwood's acquisition of a 49% stake in Talison announced on December 2 raises our conviction that lithium business will see healthy volume and price growth over the next 3+ years. The acquisition combines Rockwood's 32% share in lithium with Talison's upstream lithium ore that is used in another 17% of lithium production, creating a global leader. We believe that lithium market has been tightening in 2013 as most major producers operated at capacity, while demand grew. Rockwood appears well-positioned to take advantage of that tightness given its low cost position on the curve and improved industry structure. We raise our PO to $86, representing 13.2x average EBITDA for 2014-15 or 20.7x our 2015 EPS estimate of $3.15 as adjusted for excess cash and pending buyback." Rockwood Holdings closed on Thursday at $70.22.