RYAM - Rayonier Advanced Materials upgraded to Outperform at RBC

2023-05-11 12:05:28 ET

Rayonier Advanced Materials ( NYSE: RYAM ) late Wednesday was upgraded to Outperform from a previous investment rating of Sector Perform by analysts at RBC Capital. They said the maker of forestry products is poised for gains after refinancing part of its debt.

“The key event for Rayonier ( RYAM ) is to refinance its approximately $300 million unsecured debt this quarter,” Paul C. Quinn, analyst at RBC, said in a May 10 report. “We believe the company will be successful, and recovering specialty demand in the second half of 2023 along with declining costs should bring back-half cash flow momentum. There is considerable potential upside in Rayonier’s ( RYAM ) equity.”

Rayonier’s ( RYAM ) stock rose 8.8% to $4.97 a share by 11:28 a.m. ET on Thursday, partly recovering from its 17% decline to $4.57 a share the day before.

The company this week reported a Q1 profit of $2 million, or $0.02 a share, compared with a loss of $25 million, or $0.39 a share, a year earlier.

Excluding one-time items, adjusted EPS from continuing operations was $0.05 a share, compared with the consensus estimate of $0.09 a share among Wall Street analysts.

Sales rose 33% from a year earlier to $467 million in Q1, compared with the average estimate of $420.8 million.

During a conference call with analysts to discuss results, Rayonier ( RYAM ) management described its effort to refinance debt while avoiding the issuance of more equity that might dilute the holdings of current shareholders. Rayonier ( RYAM ) said it’s prepared to refinance its senior unsecured notes due June 2024, which totaled $317.7 million on April 1, according to a regulatory filing .

“We actually believe that our credit metrics are indicative of a B credit and as a consequence, we're going to be looking at all kinds of different debt structures, whether it's high-yield, looking at syndicated loans or whether it's privately placed loans,” De Lylse Bloomquist, president and CEO of Rayonier ( RYAM ), said during the call . “We strongly believe that we'll be able to refinance this debt with debt.”

Seeking Alpha contributor SM Investor rates Rayonier Advanced Materials ( RYAM ) as a Buy, based on the possibility prices for cellulose products . Contributor Rational Expectations rates Rayonier ( RYAM ) as a Buy on improved pricing for its products .

More on Rayonier Advanced Materials

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• Rayonier climbs after high cellulose volumes help with Q3 beat

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