Tronox: Operational Stability and Emerging Pricing Tailwinds Offset by Cost Pressures and Elevated Leverage, Justifying a Hold Rating

In a report released today, Vincent Andrews from Morgan Stanley maintained a Hold rating on TRONOX, with a price target of $4.00.

Vincent Andrews has given his Hold rating due to a combination of factors that leave the risk/reward profile balanced rather than clearly attractive or clearly negative. He notes that fourth-quarter titanium dioxide (TiO2) volumes are generally tracking in line with management’s guidance, and that pricing, while expected to slip modestly, is behaving as anticipated across regions, especially where trade protections support Western producers. However, his EBITDA projection for the quarter sits below both company guidance and market consensus, as he builds in higher TiO2 production costs and continued pressure on zircon prices, including a cost headwind from restarting the Stallingborough facility.

At the same time, Andrews acknowledges that Tronox should still deliver positive free cash flow in the quarter, aided by inventory sales during the plant downtime, which provides some near-term support to the equity story. Looking into 2026, though, he highlights that Tronox’s elevated leverage—around 7.5x net debt to EBITDA on a trailing basis—creates concern around future cash generation and balance sheet flexibility. He also points out that broader investor sentiment remains cautious, centered on the high debt burden and still-soft demand conditions, which tempers enthusiasm despite announced TiO2 price increases that could benefit results starting in early 2026. Altogether, the mix of operational stability, emerging pricing initiatives, cost and leverage headwinds, and wary market sentiment leads him to a neutral, or Hold, stance on the shares.

In another report released on December 10, TR | OpenAI – 4o also reiterated a Hold rating on the stock with a $5.00 price target.