Solstice Advanced Materials has a leg up over its competitors, according to RBC Capital Markets. The bank upgraded the chemicals stock to outperform from sector perform. Analyst Arun Viswanathan also hiked his price target to $75 from $50, which signals 23% upside from Friday's close. Viswanathan cited Solstice's ability to grow at an outpaced level versus its specialty chemical peers. A main growth driver will come from the refrigerants business, and Solstice has an advantage in the HFO business, a newer and more environmentally friendly class of refrigerants. SOLS 6M mountain SOLS 6M chart The analyst also sees shares rising due to Solstice's monopoly-like position when it comes to uranium processing, particularly its dominance in a required step to enrich uranium for nuclear fuel. "SOLS is a key player in conversion of uranium ore to UF6 (and the only company operating in the U.S.), and demand for conversion has increased in the last several years, primarily on improving demand, and sanctions on foreign producers," he said. "Currently, SOLS has the option to grow its UF6 conversion capacity from 9k tons, to 12k tons by 2030 (nameplate 15k). Price should continue to be a tailwind for the segment as 3-5 year contracts roll over." Long term, Viswanathan also believes that the company could continue reducing costs, predicting that Solstice's selling, general and administrative expenses could potentially shrink by $50 million. Solstice was spun off from Honeywell in late October. The stock is up more than 25% over the past three months.
