In a report released yesterday, John McNulty from BMO Capital maintained a Buy rating on TRONOX (TROX – Research Report), with a price target of $13.00.
John McNulty has given his Buy rating due to a combination of factors influencing TRONOX’s strategic decisions and financial outlook. The permanent closure of the Botlek facility is seen as a positive move for TRONOX, as it addresses the issue of overcapacity in the titanium dioxide (TiO2) market, particularly with China’s continued expansion. This decision is expected to create a tighter supply-demand environment, which could benefit TRONOX and improve its free cash flow (FCF) significantly by 2025, aiding in the company’s deleveraging efforts.
Additionally, the closure is anticipated to result in incremental cost savings and improved asset utilization across TRONOX’s remaining facilities. These operational efficiencies, coupled with the potential for increased pricing power due to EU tariffs, are likely to enhance TRONOX’s earnings in the near future. As the TiO2 cycle begins to favorably impact the market, TRONOX is positioned to outperform, making it an attractive investment opportunity according to McNulty’s analysis.