FBR Capital Cuts Price Target on Horsehead Holding (ZINC) to $9 Following 3Q

FBR Capital maintained an Outperform rating on Horsehead Holding (NASDAQ: ZINC), and cut the price target to $9.00 (from $12.00), following the company's 3Q. The company reported success of its bleed treatment pilot program, enabling throughput of up to 60% capacity there, and remained focused on engineering a full-scale solution. The Mooresboro facility produced ~9,700 tons of zinc metal in 3Q15 and is currently plating ~125–160 tons per day. The company also took a 10-day maintenance outage in October, realizing an “immediate” improvement in the zinc production rate and quality.

Analyst Lucas Pipes commented, "Last week, Horsehead Holding announced a 3Q miss and provided a broad and welcome update to its Mooresboro facility ramp-up. The company reported success of its bleed treatment pilot program, enabling throughput of up to 60% capacity there, and remained focused on engineering a full-scale solution (roughly estimated to require capex of $15M). Currently restraining the facility is the premature failure of anodes in the facility’s cellhouse due to failure of certain organic filters to capture impurities. This is necessitating replacement of roughly half of the anodes over the next 10 weeks at a capex of $8M to $10M. The company was confident it would achieve 60% capacity on the replacement of these anodes and anticipated realizing full capacity with the aforementioned full-scale solution at the bleed treatment plant, including other small items to improve equipment uptime. Altogether, we were encouraged by the company’s update and confidence, though no time frame was provided for reaching 100% capacity. Additionally, while the company affirmed liquidity over the next 12 months, further financing may still be required thereafter. We maintain our Outperform rating on Horsehead on our expectations for the company’s eventual success at the Mooresboro facility."

For an analyst ratings summary and ratings history on Horsehead Holding click here. For more ratings news on Horsehead Holding click here.

Shares of Horsehead Holding closed at $2.34 yesterday.

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