Solvay: Société Générale renews buy rating

(CercleFinance.com) - Société Générale (SG) has become more optimistic about the share of Belgian chemist Solvay, whose price has fallen by about 10% over the past two months.


Indeed, SG analysts have upgraded their previous "hold" rating to "buy," upping their 12-month target price from 105 euros to 135 euros (+28.6%).

Admittedly, Solvay posted disappointing Q3 results, which resulted in SG downgrading its rating on the stock, worrying about the group's growth momentum and the stock's valuation.

However, analysts are now changing their minds: "With the BASF deal, we see it successfully transforming its mix into one of the most attractive of the industrial specialties," says SG's research report. In September, Solvay announced the sale of its polyamide business to the German giant.

As a result, according to SG, the share of specialty products should rise to 56% of Solvay's portfolio (and even 76% including 'semi-specialties'), i.e. double the level of 2012.

In short, "from 2018 we see the growth engines delivering nearer their potential," said SG. This is particularly the case as Turkish competition, which has often been cited recently, seems "manageable".

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