Ingevity Delivers On Expectations And Executes Solidly, Buckingham Says In Upgrade

Specialty chemicals manufacturer Ingevity Corp (NYSE: NGVT) announced at its Investor Day last month five-year targets that point to more rapid than expected earnings growth, an analyst at Buckingham Research said.

The Analyst

Buckingham's Mark Weintraub upgraded Ingevity from Neutral to Buy and increased his price target from $64 to $92, suggesting roughly 20 percent upside.

The Thesis

Ingevity has been consistently delivering on expectations, having delivered seven consecutive earnings beat since it went public, Weintraub said in a note.

The company's execution is solid, and if the new guidance is achieved, there could be substantial upside to the stock, Weintraub said.

Among the key drivers that are becoming clearer are the prospects for the Performance Materials segment, which is being propelled by the North American business, with China also set to join the party soon, the analyst said. He sees the revenues and margins of the Performance Chemicals segment jumpstarting, thanks to the impending acquisition of Georgia-Pacific's chemicals business.

As such, Buckingham increased its 2018 earnings per share estimate for Ingevity from $3.10 to $3.30, incorporating lower tax rates in its model. The firm initiated its 2019 earnings per share estimate of $4.15.

"We see bull case/bear case valuation of $120/$64," the firm said.

The Price Action

Ingevity shares are up about 37 percent over the past year.

At time of writing, the stock was up 2.3 percent to $79.36.

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