UBS Downgrades TRONOX (TROX) to Neutral

UBS analyst Joshua Spector downgraded TRONOX (NYSE: TROX) from Buy to Neutral with a price target of $3.60 (from $8.00).

The analyst comments: "We downgrade our rating on TROX to Neutral as 1) volumes/earnings remain more challenged near term, 2) we see a recovery further out than we previously expected, and 3) FCF/leverage remains more challenging in a weaker demand environment. TROX cut its dividend by 60% to help work through this, but we think a much stronger demand environment will be needed for FCF or inventory to improve meaningfully. TROX back integration into TiO2 ore/mineral sands helps the company achieve above industry average margins, but this is also a larger drag on FCF (2025E FCF >$100M use) and could shift to impact earnings negatively as well in a downcycle. We reduce our EBITDA/FCF outlook and now see minimal FCF over the next two years, and leverage in the ~5-7x range. TROX FCF yield does not become attractive until 2027E, and therefore we downgrade to Neutral and wait for more visibility."

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

Shares of TRONOX closed at $3.40 yesterday.

You May Also Be Interested In

• KB Home (KBH) PT Raised to $56 at Truist Securities
• X-Energy Inc (XE) PT Lowered to $22 at Jefferies
• JPMorgan raises S&P 500 target to 7,800, says earnings revision ’unprecedented’