Market Overview

Citi's Top SMID Pick Is U.S. Silica

Share:
Citi's Top SMID Pick Is U.S. Silica

On Monday, Citi issued a company note on U.S. Silica Holdings Inc (NYSE: SLCA), initiating coverage on the company after analysis showed strong secular growth. Currently, analysts at Citi rate U.S. Silica as a Buy with a $25 price target.

Scott Gruber and Michael Sabella, analysts at Citi, wrote, "U.S. Silica is our top U.S. SMID pick as the stock combines the strongest secular growth story of any company under our coverage, significant operating leverage, manageable balance sheet risk and a modest valuation. We forecast a doubling of revenues over 2016-18 and EBITDA eclipsing the 2014 peak."

Related Link: Everything You Might Have Missed This 13F Season, Part 1

Justification: Profitability

Analysts at Citi gave the key reason why they see strength in U.S. Silica as profitability.

Analysts noted that while U.S. Sicilia has a large amount of fixed costs, due to the company's strong network position, they have the potential to take significant market share and achieve high profitability due to economies of scale.

Furthermore, while cash flows are expected to decline in 2016 due to the large investments that are necessary, Citi noted that the company has a large enough cash balance to fund itself through 2018.

At the time of publication, U.S. Silica was trading up 7.27 percent on the day at $19.19.

Image Credit: Public Domain

Latest Ratings for SLCA

DateFirmActionFromTo
Jul 2019MaintainsUnderweight
Jan 2019DowngradesOverweightEqual-Weight
Oct 2018MaintainsOutperformOutperform

View More Analyst Ratings for SLCA
View the Latest Analyst Ratings

Posted-In: Analyst Color Long Ideas News Price Target Commodities Markets Analyst Ratings Movers Best of Benzinga

 

Related Articles (SLCA)

View Comments and Join the Discussion!

Janney: Time To Buy Acceleron

25 Headlines Moving The Markets This Week