RBC: You Say Legal Troubles, We Say 'Opportunity'

• Rayonier Advanced Materials Inc RYAM shares are down nearly 50 percent since August 4 but recovered by 5.79 percent on September 3.
• RBC Capital Markets analyst Paul C. Quinn upgraded the rating on the company from Sector Perform to Outperform, while reducing the price target from $14 to $10.
• Quinn believes there is limited downside to Rayonier’s current share price and it may even bounce back on the near-term outcome of contract litigation with Eastman.

Analyst Paul C Quinn pointed out that Rayonier’s shares are bearing the brunt of the company’s legal dispute related to a supply agreement with Eastman. “Following the company's 8-K filing from August 18, RYAM's share price has fallen 52.9% (vs. -7.0% for the S&P 500),” the report noted.

Quinn expects the decline in CS prices to continue due to tightening market conditions that have resulted after Rayonier reduced capacity in the specialty dissolving pulp market. The adjusted diluted EPS estimate for 2016 has been raised from $1.16 to $1.17.

The company’s stock is currently trading at a discount to its global commodity pulp peers and global chemical companies, Quinn added.