J.P. Morgan Ups PT To $55 On ROC

J.P. Morgan has raised its price target on Rockwood Holdings ROC from $47 to $55 to reflect its revised estimates on the stock. Says J.P. Morgan, in its report, “Rockwood has interesting long-term investment characteristics embedded in its lithium operations, in our view. The valuation is not expensive though not distressed either: the shares trade at 6.8x EBITDA for 2011E relative to a peer group average of 5.5-7.5x including mid cap Specialty Chemical companies such as ASH, FOE, and MTX. On a P/E basis, ROC trades at 15.3x relative to a peer group of 13-18x. ROC has exceptionally strong earnings prospects in 2011. We find ROC shares attractive but prefer companies such as Ashland as a risk/reward instrument to invest in Specialty Chemicals based on valuation and given ROC's share price performance. ROC shares have risen 40% this year from $39 to $55 versus an 8% lift for the market, and a 21% increase for ASH. We raise our December 2011 price target from $47 to $55 to reflect our revised estimates.” J.P. Morgan maintains a Neutral rating on ROC. ROC closed at $55.10 yesterday.