The firm downgraded the stock given the given the recent agreement on July 29 to acquire Solvay for $75.25 per share or $6.4 billion enterprise value.
"As a result of the announcement, our 12-month price target of $73 has been surpassed, and we therefore believe a 'sector weight' rating is more appropriate at this time," KeyBanc analysts said.
However, the firm continues to view Cytec Industries as a company with some of the highest organic growth potential within specialty chemical coverage universe, with good visibility and an overall attractive portfolio of assets, with the Aerospace Materials franchise likely the most coveted assets in the deal.
Cytec Industries, based in Woodland Park, NJ, is a specialty materials and chemicals company focused on developing, manufacturing and selling value-added products.
Shares of Cytec Industries are dropping 0.12% to $73.99 in mid-morning trading Thursday.
Separately, TheStreet Ratings team rates CYTEC INDUSTRIES INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate CYTEC INDUSTRIES INC (CYT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, solid stock price performance and expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.58, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.47, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has increased to $54.80 million or 24.54% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -16.05%.
- Compared to its closing price of one year ago, CYT's share price has jumped by 46.44%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.9%. Since the same quarter one year prior, revenues slightly dropped by 3.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- 36.93% is the gross profit margin for CYTEC INDUSTRIES INC which we consider to be strong. Regardless of CYT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 10.76% trails the industry average.
- You can view the full analysis from the report here: CYT Ratings Report