Morgan Stanley cuts Solvay to 'underweight' on expected fall in soda ash prices
11:36 (09-02) - Bron: Reuters
BUZZ-MS cuts Solvay to 'underweight' on expected fall in soda ash prices
** Morgan Stanley cuts Belgian chemicals maker Solvay (SOLB -1.57%) to "underweight" from "equal-weight" on an expected drop in prices of soda ash, which the company has high exposure to
** The broker expects 2024 European contract prices for soda ash to fall by around 23% from all-time highs last year
** Most soda ash contracts are linked to the price of gas, which is falling, MS says, adding that more than 40% of Solvay's sales are exposed to the chemical
** MS slashes its PT by 14% to 21.5 euros; Solvay closed at 23 euros on Thursday
** Softer supply-demand fundamentals also contribute to skewing earnings and risk/reward to the downside, MS says
** "While the stock is not expensive, with a 10%/17% dividend/FCF yield likely to be supportive, the trajectory for an earnings reset remains a key driver of the stock price and limits the potential for a near-term re-rating, in our view," - MS
** Out of 18 analysts that cover Solvay, eight rate the stock "strong buy" or "buy", ?six rate it "hold" and four? rate it "strong sell" or "sell"