On Wednesday, Citi analysts revised their outlook on Arkema SA (OTC:ARKAY) (AKE:FP) (OTC: ARKAF), upgrading the stock from Neutral to Buy and increasing the price target to €100.00 from €93.50. The upgrade reflects the firm's positive view of Arkema (EPA:AKE)'s potential to drive sales and earnings with less dependence on economic cycles compared to its peers.
Arkema, a specialty chemicals and advanced materials company, is seen as having a high risk/reward ratio within its sector. Citi's analysis suggests that Arkema stands out due to its favorable market positioning, which includes a strong end market mix anticipated for the coming year, significant exposure to the U.S. market, and substantial potential for earnings growth if overall demand picks up.
The analyst notes that Arkema is well-positioned to benefit from secular growth trends, including the electric vehicle (EV) market and regulatory tailwinds, such as the use of HFO 1233zd, a low global warming potential refrigerant. Furthermore, strategic projects are expected to bolster earnings, with Arkema's partnership with Nutrien (NYSE:NTR) on a hydrogen fluoride supply agreement highlighted as a key factor.
These initiatives are projected to contribute approximately €100 million to Arkema's EBITDA annually through 2028, with the majority of the capital investment already in place. This financial outlook, combined with the company's strategic alignments and project ramp-ups, underpins the rationale for the stock's upgrade and revised price target.
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