This morning, the quiet period expired for recent IPO Venator Materials (VNTR), and for the most part, analysts were positive on the chemical manufacturer. The bullish initiations have shares trading higher by about 2% at the open. After a sluggish start for VNTR, in which the stock shed as much as 13%, shares have snapped back nicely over the past few sessions. However, the stock is still trading slightly below its IPO opening price.
For some background on the company, VNTR is a global manufacturer of chemical products that are used in many everyday life items, such as construction materials, plastics, paper, printing inks, pharmaceuticals, food, cosmetics, fibers, and personal care. Its products include a broad range of pigments and additives that bring color and vibrancy to buildings and reduce energy consumption. Currently, VNTR operates 27 facilities and it sells its products in more than 110 countries.
It operates through two segments, Titanium Dioxide (TiO2, 72.4% of revenue) and Performance Additives (28% of revenue). There is some overlap, in terms of end markets, between the two groups. But, its Performance Additives are exclusive to the construction materials market and are used in concrete blocks and roof tiles.
Over the past few years, the company has invested $1.3 billion in both of these businesses, in the form of acquisitions, restructuring, and integration. Currently, it is implementing additional business improvements within both segments, which it expects will provide further contributions to Adj. EBITDA this year until the end of 2018. These actions will include the launch of new products, optimization of its manufacturing network, and the closure of some facilities.
On July 28, the company issued its Q2 results, its first quarterly report since its IPO. There weren't any analyst estimates available at that time to compare the results to. Sales declined about 2% year/year to $562 million, but, it generated an operating profit of $50 million compared to an operating loss of ($30) million in the year ago period. The company was able to pay down some debt during the quarter, but, the balance still remains very high at $1.13 billion.
As for this morning's initiations, most were positive, highlighted by Goldman Sach's Buy and $25 price target. Nomura and SunTrust also initiated the stock with a Buy while JP Morgan gave the stock an Overweight and $23 target. On the cautious side, Barclays initiated the stock with an Equal Weight and UBS put a Neutral on it.