Auriga Starts Globe Specialty Metals (GSM) at Buy

Auriga initiates coverage on Globe Specialty Metals (NASDAQ: GSM) with a Buy. PT $23.00.

The firm said, "Our Buy rating is based on not only the company's fundamental story of being well positioned to benefit from recovering end markets, but also its growth through acquisition story. The company has made a series of strategic transactions, typically paying 3-4x forward EBITDA. We also note that the silicon metal industry is essentially operating at peak capacity (excluding standard maintenance outages), while many of its key end markets are operating well below these levels, positioning the industry for a potential further strengthening in the product pricing dynamics. Furthermore, there are significant barriers to entry for the industry and along with many other basic materials stocks, the shares have declined dramatically, creating a more attractive entry point. While we can't rule out more downside in the shares, we recommend investors take partial positions and add on weakness. Our $23 price target is based on a 13x P/E multiple applied to our calendar 2012 EPS estimate of $1.75."

For more ratings news on Globe Specialty Metals click here and for the rating history of Globe Specialty Metals click here.

Shares of Globe Specialty Metals closed at $13.51 yesterday.

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