Aegis Capital Starts W.R. Grace & Co. (GRA) at Buy

Aegis Capital initiates coverage on W.R. Grace & Co. (NYSE: GRA) with a Buy rating and a price target of $79.00.

Analyst Chris Kapsch commented, "Since emerging from bankruptcy in early 2014, GRA has been a dramatic laggard. If including GCP (spun tax-free from GRA in 2016), combined GRA+GCP shareholder value is down slightly in the past 3 years, compared to an approximate 27% gain for the S&P. We attribute this sharp recent underperformance to GRA’s valuation having reached an extreme at the time of bankruptcy emergence, due in large part to hedge-fund community over- (irrational?) exuberance, likely takeout speculation, and perhaps a misunderstanding regarding the quality – or at least the growth characteristics – of core GRA businesses. Now, conversely, investor sentiment seems overly circumspect, in our view. Moreover, M&A expectations have seemingly faded, despite GRA management remaining willing if not intent on doing additional accretive deals, perhaps even something transformative. Overall GRA fundamentals are mixed, but a case can be made that visibility for Catalysts will be improving as 2017 ensues. All considered, we now like the risk/reward in GRA, and recommend buying the stock here. Our $79 price objective, derived using a 12-12.5x EV/EBITDA multiple assumption, represents 15% upside from current levels."

For an analyst ratings summary and ratings history on W.R. Grace & Co. click here. For more ratings news on W.R. Grace & Co. click here.

Shares of W.R. Grace & Co. closed at $69.33 yesterday.

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