UBS Downgrades Venator Materials (VNTR) to Sell
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UBS analyst Joshua Spector downgraded Venator Materials (NYSE: VNTR) from Neutral to Sell with a price target of $0.65 (from $2.05).
The analyst commented, "We downgrade VNTR to Sell from Neutral as we believe mounting pressure from declining TiO2 demand, higher cost structure, and weak FCF weigh on the stock. TiO2 peaked earlier this year, and now with weaker demand, particularly in Europe, we believe we are seeing a significant wave of destocking. This alone could potentially drive volumes down ~10-20% Y/Y, but with ~80% of VNTR's TiO2 capacity in Europe, VNTR is also experiencing much higher costs. Absent pricing surcharges, VNTR's TiO2 EBITDA would likely be negative, and now the increasing threat of lower priced Chinese imports could pressure the ability to get pricing on less specialized TiO2 products. We reduce our 2023E EBITDA estimates ~41% on lower volumes and higher costs, and believe the stock could have minimal support given the structural challenges of its cost base."
Shares of Venator Materials closed at $0.96 yesterday.
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