On Monday, Minerals Technologies Inc . (NYSE:MTX) received an upgrade from Seaport Global Securities, shifting from a Neutral to a Buy rating. The firm also set a price target for the company's stock at $90.00.
Seaport Global Securities based the upgrade on Minerals Technologies' strong performance at the end of 2023 and the company's positive outlook towards reaching its 15% operating margin goal by 2025. The firm cited a favorable mix of factors for the upgrade, including improving product mix, disciplined cost management, and operational efficiency. Additionally, confidence in volume growth was noted as a contributing factor to expected operating leverage.
While the first quarter estimate for 2024 was adjusted downwards to align with the company's guidance, Seaport Global Securities increased its revenue and EBITDA estimates for the remainder of the year. However, the firm adopted a slightly more conservative stance on the operating margin expansion, revising it down from 14.0% to 13.8%. This is due to Minerals Technologies' indication that a 14% operating margin for the full year of 2024 would require some market improvements.
The analyst highlighted that Minerals Technologies has clear visibility on growth in its Household & Personal Care segment, especially in Pet Care, and in High-Temperature Technologies. The Specialty Additives segment is also expected to benefit from new business wins and a recovery in North American paper production rates. However, commercial construction may continue to be soft during the first half of the year, which could affect volume growth in the Environmental & Construction segment.
Seaport Global Securities pointed out that Minerals Technologies' strong free cash flow projections for 2024, with a midpoint guidance of $150 million, implies a 6.7% yield. This robust cash flow is anticipated to support both organic and inorganic growth strategies, as well as further share buybacks under the existing $75 million authorization. The firm also noted that the company's shares are currently trading at 7.3 times its estimated 2024 EBITDA, which is below the five-year average of 8.1 times. The $90.00 price target is based on 8.0 times the firm's projected 2025 EBITDA for Minerals Technologies.
InvestingPro Insights
Minerals Technologies Inc. (NYSE:MTX) has been capturing the attention of investors and analysts alike, with Seaport Global Securities recently upgrading the stock to a Buy rating and setting an ambitious price target of $90.00. The optimism surrounding the company is mirrored in the InvestingPro data and tips, which provide further insights into the company's financial health and market performance.
InvestingPro data reveals a market capitalization of $2.29 billion and a Price/Earnings (P/E) ratio of 34.84, which adjusts to a more modest 13.6 when considering the last twelve months as of Q4 2023. This suggests that while the stock may seem pricey at first glance, its earnings power is strong when looking at the adjusted figures. The company's revenue growth has been steady, with a 2.09% increase over the last twelve months as of Q4 2023, and a quarterly revenue growth of 3.33% for Q1 2023.
An InvestingPro Tip highlights that Minerals Technologies' net income is expected to grow this year, aligning with Seaport Global Securities' positive outlook. Additionally, the company has a history of stability, trading with low price volatility and maintaining dividend payments for an impressive 32 consecutive years. These factors could be particularly appealing to investors seeking a mix of growth prospects and reliable income.
For those considering an investment in Minerals Technologies, InvestingPro offers additional insights. There are currently 7 more InvestingPro Tips available for MTX, which can be accessed by subscribing to InvestingPro+. The subscription is now on a special New Year sale, offering a discount of up to 50%. To sweeten the deal, use coupon code SFY24 to get an additional 10% off a 2-year InvestingPro+ subscription, or SFY241 to get an additional 10% off a 1-year InvestingPro+ subscription.
The InvestingPro data and tips not only reinforce the positive sentiments expressed by Seaport Global Securities but also provide potential investors with a broader picture of the company's financial robustness and market potential.
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