VNTR - Venator Materials downgraded to Sell at UBS on weaker chemicals demand

Venator Materials ( NYSE: VNTR ) on Thursday was downgraded to a Sell rating from Neutral by analysts at UBS who said declining demand is weighing on the stock. The bank cut its Q3 estimate for Venator to a loss per share of -$0.11 from EPS of $0.02.

Venator fell as much as 14% during today’s session after disclosing a "meaningful decline" in sales volume for its titanium dioxide products in Europe and Asia during the current quarter.

UBS said weaker demand for titanium dioxide, a mineral typically used as a white pigment in consumer and industrial products, is weighing on Venator. A wave of inventory reductions among manufacturers is driving down volumes of titanium dioxide by 10% to 20%, UBS estimated.

The bank cut its EBITDA forecast by 41% to $141 million for 2023 as Venator copes with lower volumes and high costs for energy in Europe, where the company has about 80% of its production capacity.

“On our reduced earnings outlook, EBITDA doesn't meaningfully improve until 2025,” Joshua Spector, analyst at UBS, said in the Oct. 6 report. “We assume capex and other discretionary spend is flexed down near term, but that still doesn't get to positive free cash flow in our view.”

Venator is down 67% this year, compared with a compared with a 23% decline for the Russell 200 Index ( RTY ).

Venator's updated guidance followed Tronox's ( TROX ) warning of weak titanium dioxide sales , while Chemours ( CC ) cited declining demand in its Titanium Technologies business for cutting its earnings guidance .

Seeking Alpha contributor Gold Panda has a Sell rating on Venator ( VNTR ) because of concerns about titanium dioxide demand .

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