In a report released today, John McNulty from BMO Capital downgraded TRONOX (TROX – Research Report) to a Sell, with a price target of $3.00.
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John McNulty has given his Sell rating due to a combination of factors affecting TRONOX. The company is facing a challenging demand environment, with weak markets in the US housing sector, sluggish construction in China, and stagnant demand in Europe. These conditions have led to tough pricing scenarios, even in regions where tariffs were expected to provide some protection.
Additionally, TRONOX is grappling with high costs that are not being absorbed quickly enough through its financial operations. This slow movement of costs, coupled with the company’s significant leverage, poses risks to its future earnings and cash flows, as well as its ability to maintain dividend payouts. These elements combined have led to a downgrade in the stock’s rating.