What A Difference A Month Makes: DA Davidson Downgrades PH Glatfelter

Shares of PH Glatfelter Co GLT plummeted about 20 percent on disappointing Q3 earnings and soft Q4 guidance. With the severity of the decline seeming extreme, shares gained about 30 percent over the past month. This recovery also seems extreme, DA Davidson’s Steven Chercover said in a report.

He downgraded the rating on the company from Buy to Neutral, while raising the price target to $25.

Although PH Glatfelter has growth opportunities and the sector has witnessed some multiple expansion, there seems to be limited upside from here for PH Glatfelter’s shares, Chercover commented.

Growth To Reaccelerate

“Looking to 2017 and 2018 we believe GLT has the opportunity to resume the growth trend that allowed it to flourish from 2009-2014,” Chercover wrote. He explained that the Composite Fibers business had witnessed challenges between 2015 and 2016, but growth could be achieved with the start of commercial shipments from the new Arkansas facility in Q1 2018.

Apart from Composite Fibers, the company also seems poised to benefit from the Airlaid segment. Moreover, PH Glatfelter has a robust balance sheet, ending Q3 2016 with $51 million in cash, the analyst said.