Jefferies & Company Reports on Nalco

Jefferies & Company commented on Nalco NLC in a report released today. In the report, Nalco was mixed in its assessment of the company. Jefferies writes, "Energy Services has grown at a 26% CAGR since 2009 in BRIC countries due in part to successful investments in supply (Brazil), blending (Russia) and a JV with LUKOIL (LKOH, $64.00, NC) in West Siberia. Further investments are underway in Kazakhstan, Azerbaijan, Egypt, and China which will increase R&D and support the company's goal of growing the segment at a 6.5% CAGR through 2015E. Nalco remains on the prowl for adjacent products and technologies it can leverage globally, particularly in emerging regions (Latin America & Asia) to compliment its downstream business. Our $30 price target reflects 9.0x 2012E EBITDA and 16.7x EPS (vs. current 9.3x 2011E EBITDA). This target is supported by our regression of chemical valuation multiples, profitability ratios, and our forecasts for Nalco's performance in 2010–2012. Key risks: raw materials, competitive behavior in more fragmented markets." Jefferies & Company currently has a Hold rating on Nalco and a price target of $30. Shares of Nalco closed at $28.54 on Tuesday.