Tronox Holdings PLC TROX shares are rising higher after BMO Capital Markets upgraded the stock to Outperform from Market Perform at an increased price target of $18 from $11.
The analyst John P. McNulty expects 2024 to mark the inflection point for the company with the end of destocking along with modestly improving industry demand and potentially more for Western producers (depending on EU China dumping restrictions).
For TROX, the analyst expects volumes to increase in high-single-digits/low-single-digits in 2024 and pricing down Y/Y in 2024, which should gradually improve by 2% by Q4 2024.
The improved operating leverage and falling raws/costs (H2 FY24) should aid TROX in driving a considerable rebound in earnings and cash flows, says the analyst.
Although McNulty projects TROX's struggle with high-cost inventory to continue in H1 FY24, he sees costs abating in H2 FY24 to boost earnings.
Also, the analyst sees the EU investigation into China dumping as a potential positive for TROX, assuming that the EU finds China was dumping products in the hopes of gaining shares.
Price Action: TROX shares are up 4.71% at $14.23 on the last check Monday.
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