Market Overview

4 Reasons To Be Buyers Of Chemours, Courtesy Of RBC

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The Street continues to significantly undervalue Chemours Co (NYSE: CC), a global chemical solutions company and the stock offers investors a potential 40 percent return, according to RBC.

The Analyst

RBC Capital Markets' Arun Viswanathan initiated coverage of Chemours with an Outperform rating and $60 price target.

The Thesis

The bullish case for Chemours' stock is four-fold, Viswanathan said in a note.

The company is likely to show the strongest structural growth outlook, aided by a high-single-digit percentage growth in the Flouroproducts segment through 2021.

Chemours could use its lower cost structure and a portion of spot sales to fight back against price gouging and new capacity from smaller/higher cost competitors to provide price stability to its coating clients, the analyst said. In fact, customers prefer a stable or slightly inflationary TiO2 costs compared to drastic declines which would undermine coatings price increases.

The company could generate $3.1 billion of free cash flow over the coming three years, which would be large enough to allocate $2 billion towards organic and inorganic growth opportunities.

Chemours' stock is trading at an attractive valuation at just 4.5 times 2019 estimated EBITDA and the Flouro business is notably undervalued as the market is placing an 8 times multiple on the business.

Price Action

Shares of Chemours were trading higher by more than 3.6 percent Wednesday afternoon.

Posted-In: Analyst Color Analyst Ratings

 

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