Analysts John Roberts and Edlain Rodriguez said their prior concerns regarding Chemours' ability to deliver cost savings, fluoroproducts growth and liabilities have been disproved by the thumping performance.
UBS said the company continues to benefit from TiO2 price increases and cost savings following the bottom in the first quarter. The company expects price increases of 15 percent for 2017 and 10 percent for 2018, although expecting prices to moderate after 2017. TiO2 account for about 55 percent of the 2018 EBITDA.
Additionally, the firm said fluoroproducts, accounting for about 40 percent of 2018 EBITA, continue to ramp to nextgen refrigerants. The firm believes Opteon HFO would be a key growth driver, with the company investing to triple capacity by the end of next year.
The firm noted that the company raised its EBITDA guidance for the second half from $640 million to about $650 million to $750 million. Accordingly, the firm sees a more balanced risk/reward going forward.
Consequently, UBS raised its EBITDA estimates for 2017 from $1.25 billion to $1.36 billion, for 2018 from $1.47 billion to $1.62 billion and for 2019 from $1.45 billion to $1.65 billion.
As such, UBS upgraded shares of Chemours from Sell to Neutral and raised its price target from $36 to $50, as it moved its valuation base to 2018 to reflect higher confidence in the growth outlook.
At the time of writing, Chemours is advancing 1.60 percent to $50.10.
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