Seaport Global Securities Upgrades Minerals Technologies (MTX) to Buy 'on volume confidence, margin expansion, attractive valuation'

Seaport Global Securities analyst Michael Harrison upgraded Minerals Technologies (NYSE: MTX) from Neutral to Buy with a price target of $90.00.

The analyst comments "MTX delivered a solid finish to 2023, and the company expressed optimism that it remains on track to achieve its 15% operating margin target for 2025. We are upgrading from Neutral to Buy on what we view as a strong combination of improving mix, cost discipline, and operating efficiency, as well as confidence around volume growth that should contribute to operating leverage. We did tweak our 2024 outlook, taking our Q1 estimate lower in line with guidance, but raising our revenue and EBITDA estimates for the rest of the year. We have also taken a slightly more conservative view on operating margin expansion (reduced from 14.0% to 13.8%), as MTX noted it could achieve 14% op margin for full year 2024 only with some underlying market improvement. We suspect Q1 guidance could be conservative, though there are some seasonal factors that could impact demand and costs. MTX appears to have good visibility on continued growth in Household & Personal Care (particularly Pet Care) and High-Temperature Technologies, while Specialty Additives should benefit from new business wins and recovery in North American paper production rates. Commercial construction is likely to remain weak at least during 1H, dragging on volume growth in Environmental & Construction. Strong free cash flow (2024 guidance midpoint of $150MM implies a 6.7% yield) should support organic and inorganic growth as well as further share repurchases under the $75MM authorization. Shares are trading at 7.3x our 2024E EBITDA vs. the 5-year average of 8.1x, and our $90 price target is based on 8.0x our 2025E EBITDA."

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

Shares of Minerals Technologies closed at $68.46 yesterday.

You May Also Be Interested In

• Goldman Sachs Upgrades Plains GP Holdings, L.P (PAGP) to Neutral
• UBS Downgrades Fonterra Co-operative Group Ltd (FSF:NZ) to Neutral
• UBS Downgrades Bharat Heavy Electricals Ltd (BHEL:IN) to Neutral