Jefferies Cuts Price Target on W.R. Grace & Co. (GRA); Reiterates Buy
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Jefferies maintained a Buy rating on W.R. Grace & Co. (NYSE: GRA), and cut the price target to $80.00 (from $89.00), following the company's 3Q earnings report. Adjusted EPS of $0.80 was $0.04 above consensus. Elevated refinery inventory and weak specialist catalyst demand in China are likely headwinds into 2017, but the ramp of the Takreer plant and a 1%-2% improvement in catalyst price/mix should support the 11% EPS CAGR projected through 2020.
Analyst Laurence Alexander commented, "Q3 EPS of $0.80 beat consensus and our estimate by 0.04, yet the 2016 range remains pegged at $3.05-3.10. Takreer is ramping up, but refinery inventory and PO licensing revenue remain headwinds. The EPS bridge to 2017-2018 hinges on $20m in M&A synergies, modest pricing and a return to trend organic growth. 2016E FCF yield is 6%, which should translate into some EPS lift next year."
Shares of W.R. Grace & Co. closed at $66.02 yesterday.
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