On Thursday, Solvay SA (EBR:SOLB:BB) (OTC: SOBS) saw its price target reduced by CFRA from EUR30.00 to EUR27.00, while the firm continued to recommend a Hold on the stock. The adjustment comes after Solvay reported its full-year financial results subsequent to the spin-off of its Specialty business.
The new price target is based on a projected 2024 P/E ratio of 7.5x, which represents a discount compared to the company's historical averages, a reflection of Solvay's transition away from higher-growth segments.
The chemical company's earnings per share (EPS) estimates for 2024 have been revised downward from EUR4.00 to EUR3.80, and the 2025 EPS forecast has been set at EUR4.20. Solvay's pro-forma net sales for 2023 were EUR4,880 million, marking a decline of 12.6% year-over-year. The decrease in sales was primarily attributed to a 15% drop in volumes, although this was slightly offset by a modest positive impact from pricing.
Solvay's underlying EBITDA for the year stood at EUR1,246 million, demonstrating a stable performance with a slight organic increase of 0.2%. This stability was achieved through a combination of positive net pricing and reduced fixed costs, which helped to balance out the negative effects of the lower sales volumes.
Looking ahead, CFRA anticipates a weakening in Solvay's sales strength for 2024, given its current portfolio composition. However, there is an expectation that Soda Ash prices will decline in 2024 compared to 2023, which could potentially rejuvenate some demand in the second half of the year.
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