Koppers Shares Rally As Barrington Starts Coverage With Outperform Rating

Barrington Research analyst Rudolf Hokanson initiated coverage on shares of Koppers Holdings Inc. KOP Wednesday morning. The analyst set an Outperform rating and $39 price target on the stock.

"We believe the stock offers a unique opportunity to participate in a transformation of an established company," Hokanson highlighted.

The analyst pointed to the company's three segments which each "have leading market positions":

• PC business;
• RUPS business; and,
• CMC business.

"The price of oil impacts the costs of coal tar and certain other raw materials as well as selling prices and margins for other KOP products. These include carbon black feedstock, phthalic anhydride and naphthalene. Carbon black feedstock and phthalic anhydride in particular have end market pricing that is linked to oil. When oil prices have historically risen, KOP has benefited in terms of revenues and profit from the higher pricing for these two products," according to Hokanson.

The Barrington analyst said he likes that Koppers' business is global. "Approximately 61% of sales are in North America, 13% in Emerging Markets, 17% in Australasia and 9% in Europe," Hokanson said.

As Koppers shares are up 3 percent to around $29.38 amid the note, Hokanson's new price target implied potential upside of about 34 percent.