Solstice Advanced Materials has an advantage over its competitors, according to RBC Capital Markets. The bank lifted chemical stocks to outperform the sector. Analyst Arun Viswanathan also raised his price target to $75 from $50, implying a 23% upside from Friday’s closing price. Viswanathan said Solstice has the ability to grow at a superior level compared to its specialty chemical peers. The main growth driver comes from the refrigerant business, with Solstice having an advantage in the HFO business, a newer, more environmentally friendly class of refrigerants. SOLS 6M Mountain SOLS 6M Chart Analysts also see the stock rising due to Solstice’s dominance in uranium processing, particularly in the steps needed to enrich uranium for nuclear fuel. “SOLS is an important company converting uranium ore to UF6 (the only company operating in the United States), and demand for conversion has increased in recent years, primarily due to improving demand and sanctions on foreign producers,” he said. “SOLS currently has the option to expand its UF6 conversion capacity from 9,000 tonnes to 12,000 tonnes (nameplate 15,000) by 2030.3-5 Pricing should continue to be a tailwind for the segment as the 2019 contract rolls over.” Viswanathan also believes the company can continue to reduce costs in the long term, predicting a potential $50 million reduction in Solstice’s selling, general and administrative expenses. Solstice spun off from Honeywell in late October. The stock price has increased more than 25% in the past three months.
