KeyBanc Upgrades Innospec (IOSP) to Overweight

KeyBanc upgraded Innospec (NASDAQ: IOSP) from Sector Weight to Overweight with a price target of $53.00. Analyst Ivan M. Marcuse noted attractive valuation and said M&A could be a catalyst. Chemtura (NYSE: CHMT) was also upgraded to Overweight.

"We are upgrading both CHMT and IOSP to OW for the following reasons: 1) both have been relative underperformers YTD, and valuation is attractive, in our view; 2) we believe that current 2016 estimates for both companies could potentially have upside; 3) both company's near-term results should benefit from favorable YOY price/cost dynamics; and 4) we see the active M&A environment in the specialty chemical industry as a potential catalyst for both," said Marcuse.

"IOSP’s Fuel Specialties businesses saw strong expansion in its gross margin in 2015 as a result of a positive price/cost spread. We believe that the price/cost spread may also be favorable in 1Q16. While these raw material benefits are likely to be passed to customers down the road, gross margins should still remain favorable," added the analyst.

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

Shares of Innospec closed at $43.17 yesterday.

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