Tuesday - Loop Capital has increased the price target for Ingevity Corp (NYSE:NGVT) to $56, up from the previous $56, while maintaining a Hold rating on the stock. The revision reflects a positive outlook on the company's Performance Materials segment, which has shown promising returns and is expected to continue its strong performance.
Ingevity's Performance Materials segment has been performing well, with EBITDA margins projected to reach the mid to upper 40s percentage range. This robust margin outlook is attributed to a sustained demand for hybrid vehicles in the United States, which favorably impacts Ingevity's business as hybrids require as much of the company's products as conventional cars.
The company's Performance Chemicals segment is undergoing a transformation, aiming to diversify and move away from crude tall oil feedstocks towards alternative fatty acids. Although this segment faced challenges in the March quarter, with negative margins partly due to seasonal factors and lagging feedstock costs, there is an expectation of improved clarity and progress throughout the second quarter of 2024 and the remainder of the year.
Despite the positive developments in the Performance Materials segment, Loop Capital expresses caution regarding the ongoing transformation of the Performance Chemicals segment. The firm notes that the true progress of this transition will become more apparent in the coming months.
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