Senior Analyst: JP Geygan (firstname.lastname@example.org) Associate Analyst: Satendar Singh (email@example.com)
LSB Industries, Inc. (“LSB”) manufactures and sells chemical products for use in agriculture, industrial, and mining markets. Over the past several years, low natural gas prices in the United States spurred a rash of new ammonia facility construction and expansions of existing facilities, causing an oversupply of ammonia-based chemicals and a disruption of the domestic distribution network. The resulting low-price environment began to normalize in late 2017 as distribution networks adjusted to new supply and end markets absorbed higher volumes of products. Product prices have recovered modestly; continued supply discipline and favorable demand dynamics bode well for continued price strengthening. Global Value Research Company (GVRC) believes that LSB’s internal operational improvements coupled with an encouraging outlook for its end markets imply an intrinsic value for the enterprise well above the current price of the common stock. As such, GVRC raises its target price to $13.15, representing 9.0x estimated FY 2020 EBITDA of $118.1 million.