More UHP Graphite Electrode Price Cuts in Japan Don't Bode Well for GrafTech (EAF) - GLJ Research

GLJ Research analyst Gordon Johnson reiterated a Sell rating on GrafTech (NYSE: EAF) following the news over the weekend that Tokai Carbon announced plans to cut prices for its ultra-high-performance (“UHP”) graphite electrodes a further 10%-20% for 1H20. This is the second consecutive price cut following the 2H19 cuts, he notes.

Johnson said if GrafTech’s average-selling-prices fall 20% across the board in 2020, this would reduce 2020 net income by roughly $200mn (or ~$3.8/shr, representing -30.9% downside from Friday’s closing price – using GrafTech’s current 5.49x forward P/E multiple).

The analyst doesn't believe a 10%-20% fall in UHP 600mm graphite electrode prices is priced into the stock.

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

Shares of GrafTech closed at $12.29 yesterday.

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