Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Thematic (Sector/Industry)

<h3>KEY HIGHLIGHTS</h3>
<div></div>
<ul>
<li>WTR-CMI last week.&nbsp;In another down week for the market, the S&amp;P 500 retreated 3.3%, while the Russell 2000 lost 4.7% of its value. Our WTR-CMI index of 30 chemicals and materials technology stocks underperformed the broader market, declining 5.5% for the week. All the stocks in our index finished the week in the red, with large cap coating names—AXTA, SHW, and PPG—posting the lowest declines, along with CTVA, which may have benefited from its&nbsp;announcement of a joint development of a new soybean seed with BASF. Prior week’s leader ALB was the worst performer last week, losing 9.8% of its value, as investors may have been disappointed with the&nbsp;company’s decision to keep the Catalysts business.</li>
<li>Damn the torpedoes, part 2.&nbsp;Going full-speed ahead with the development of its Ghana and Quebec mine reserves, while awaiting permitting for its NC mine,&nbsp;PLL announced plans to construct&nbsp;the country’s largest lithium hydroxide production plant in Tennessee, with production targeted for 2025.</li>
<li>US farmers appear to survive 2022 rollercoaster.&nbsp;Despite record high fertilizer, seed, and pesticide costs, not to mention supply disruptions, weather, and fuel costs,&nbsp;the USDA forecasts that US farmers will enjoy record cash incomes&nbsp;in 2022, although net farm income is expected to decline 3.3% from 2021, despite high crop prices due to aforementioned cost headwinds. With input costs continuing to go up (diesel moving north of $5/gal average again) and a slightly dented pocketbook heading into the 2022-23 season, US farmers’ ability to withstand another year of similar shocks remains under question.</li>
<li>Auto sales finally begin to recover.&nbsp;New car registrations in&nbsp;France&nbsp;and&nbsp;the US&nbsp;rose 4% Y/Y in August, albeit coming against increasingly easy year-ago comps. Still, the news is encouraging for Tier 1 auto suppliers such as PPG and AXTA in our index.</li>
<li>Builder confidence sinks.&nbsp;August was the eighth straight month of US&nbsp;builders’ confidence declining, with the August reading of 49 falling below the neutral outlook level for the first time since May 2020. We see this as a broad negative for our sector, especially for SHW, RPM, NGVT, and FULL, for whom the building &amp; construction industry represents a major end- market.</li>
</ul>
<h3>WTR-CMI WEEKLY PERFORMANCE</h3>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/296/883/original/image_18510131561662594923949.png?1662594926" class="editor-image img-responsive" data-smartkarma-image-id="296883"></figure>
<h2>Ag-Tech and Bio-Ag</h2>
<p>LATAM markets take center stage.&nbsp;With everything but the shouting over in the North American ag market for the 2021-22 season, attention is shifting to LATAM’s 2022-23 ag market forecasts. According to the Brazilian National Supply Company (CONAB), both&nbsp;soybean and corn planted acres are expected to grow in Brazil&nbsp;in 2022-23 compared with 2021-22, with more than 100 million acres of soybean being planted in the country for the first time. Still, while acres and yields are expected to grow, farms’ operating margins are forecast to decline versus this year, due primarily to higher input costs that are more than offsetting strong commodity prices and favorable currency exchange rates.</p>
<p>Higher planted acres expected in the region as well as higher use of fertilizers and pesticides are expected to benefit ag input companies. As recent research indicated,&nbsp;large multinationals are outperforming their local peers&nbsp;in this regard when it comes to LATAM markets in general, and Brazil, the region’s largest, in particular. We see this as a positive for companies like CTVA and FMC, given their strong positions in the region. Coming off a solid North American and European season, it appears ag majors are well positioned to continue their positive growth trajectory as sales shift to LATAM and we see current stock prices for both FMS and CTV as attractive entry points for investors looking to benefit from strong demand and pricing dynamics in the ag-input industry.</p>
<p>Ag majors aren’t the only ones likely to benefit from solid market conditions in LATAM. According to the Brazilian Ministry of Agriculture, Livestock and Supply (MAPA),&nbsp;there were 92 biological or low-impact pesticides approved in 2021, down slightly from the 95 approved in 2020. However, continuing expansion of bio-based pesticides, whose review and approvals are given priority by the agency, is a positive for both farmers, who will have more alternatives and solutions should synthetic chemical inputs’ cost and availability remain an issue in 2022-23, and for emerging bio-ag players, such as BIOX and BHIL, among others, who are rapidly developing bio-based alternatives to traditional synthetic pesticides.</p>
<h2>Battery Materials &amp; Energy Transformation</h2>
<p>Government regulations working at cross purposes to government intentions when it comes to electrification.&nbsp;Even as realization spreads that virtually everywhere one looks, there is a pending shortage of battery-critical materials essential for the electrification revolution to realize its full potential and growing concerns of overreliance on China for such materials already, ramping up local supply of these materials remains problematic. One consistent obstacle is government regulations around mining—the key element in domesticating the battery supply chain and reducing reliance on China and other less-than-friendly regimes. Sweden, home to many materials that could be mined to supply the burgeoning EV battery demand in EU,&nbsp;has been called out recently&nbsp;for its slow regulatory process when it comes to approving new mines in the country. In the US, there is an&nbsp;industry push to shorten and streamline&nbsp;the US mine permit review process. As companies who are looking to develop domestic supply of everything from lithium, to graphite, to rare earths and more prosaic metals such as nickel and copper, continue to bleed red ink due to permitting delays of their major projects, government regulations continue to erect barriers and raise the cost of developing such projects, which appear contrary to many governments’ stated goals and deadlines for sufficiently reducing, if not outright eliminating, dependence on fossil fuels as the basis for the economy. As the saying goes, something’s gotta give.</p>
<p>More investments and intentions announced.&nbsp;Toyota, long viewed as a laggard in EV transition race, announced it will invest close to&nbsp;$5.6 billion into making more EV batteries in the US and Japan, with the goal of raising its production capacity by 40 GWh. The company announced that $2.5 billion of that will go toward its investments into the&nbsp;North Carolina battery plant&nbsp;that will supply batteries for both hybrid as well as fully electric vehicles. Initial production is expected in 2025.</p>
<p>Meanwhile, American Manganese Inc. (OTC: AMYZF) announced that its RecycLiCo Battery Materials arm, in partnership with Kemetco Research Inc., has successfully run a bench test whereby&nbsp;the patented process recovered more than 99% of the lithium&nbsp;contained in lithium-iron-phosphate (LFP) battery cathode materials, extending the process ability, previously demonstrated for nickel-rich, manganese-rich and cobalt-rich cathode chemistries. As we highlighted in our previous issue, work continues on other, non-battery-based energy alternatives, such as hydrogen fuel cells. Recently, German&nbsp;Bosch announced plans to invest $200 million&nbsp;in its US capacity to produce said fuel cells at its South Carolina plant.</p>
<h2>Automotive &amp; Transportation</h2>
<p>We’re not out of the woods yet.&nbsp;Although new car sales comps are beginning to turn positive, as we mentioned above, we note that August improvements (and we expect the remainder of the year to follow suit) came against record low production levels seen in 2H21 and the global industry remains materially below 2019 production levels. Many issues that have plagued the industry over the last three years remain. Thus,&nbsp;Volvo will temporarily close its plant in the Chinese city&nbsp;of Chengdu due to local coronavirus restrictions.&nbsp;Stellantis halted its Sevel van-making plant&nbsp;in central Italy due to a shortage in supplies of parts.&nbsp;Toyota announced that its global output sank&nbsp;for the fourth straight month in July, as a shortage of semiconductors and supply chain disruptions caused by COVID lockdowns in China hurt production. With the world possibly entering a recession, big ticket items such as new cars may continue to see an uneven recovery in demand, even off the 2021-22 lows. While Y/Y growth in new vehicle registrations is encouraging, ongoing issues with semiconductor and other parts supplies, logistical snags, and on-again-off-again production in China as rolling COVID lockdowns continue, the industry still seems some way off from regaining its footing.</p>
<h2>Chemicals and Materials Technology in the News</h2>
<p>Architectural coatings market growth intact.&nbsp;A report by&nbsp;Research and Markets forecasts that global demand for architectural coatings&nbsp;will continue to grow at above GDP rates, driven by residential construction and remodeling, as well as commercial and infrastructure projects. The global market for architectural coatings estimated at $64.2 billion in 2022 is projected to grow at a 4.9% CAGR through 2026, reaching $79.5 billion by 2026. While this is a positive for PPG, Masco (NYSE: MAS), which supplies Behr and Kilz brand paints to Home Depot (NYSE: HD), and Berkshire Hathaway’s Benjamin Moore paint, it is particularly impactful for SHW, which dominates the paint market in the US and is one of the leading global suppliers of architectural coatings. Furthermore, with the Do It For Me&nbsp;(DIFM) trend growing once more in the US&nbsp;in the wake of COVID lockdowns, SHW may benefit disproportionately, given its extensive company-owned contractor paint stores across the country and in Canada.</p>
<h2>Recent WTR Publications and Upcoming Events</h2>
<p>Management Series Report – Loop Industries Founder and CEO Daniel Solomita (NASDAQ: LOOP)</p>
<p>Management Series Report and 2Q22 Update for Westwater Resources (NYSE: WWR)</p>
<p>Fireside Chat with Management of Loop Industries (NASDAQ: LOOP)</p>
<p>Fireside Chat with Management of Westwater Resources (NYSE: WWR)</p>
<p>Initiation of Coverage – Westwater Resources (NYSE: WWR)</p>
<h3>DISCLOSURES</h3>
<div></div>
<p>Water Tower Research (“WTR”) is a professional publisher of investment research reports on public companies and, to a lesser extent, private firms (“the Companies”). WTR provides investor-focused content and digital distribution strategies designed to help companies communicate with investors.<br><br>WTR is not a registered investment adviser or a broker/dealer nor does WTR provide investment banking services. WTR operates as an exempt investment adviser under the so called “publishers’ exemption” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940. WTR does not provide investment ratings / recommendations or price targets on the companies it reports on. Readers are advised that the research reports are published and provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities or the rendering of investment advice. The information provided in this report should not be construed in any manner whatsoever as personalized advice. All users and readers of WTR’s reports are cautioned to consult their own independent financial, tax and legal advisors prior to purchasing or selling securities.<br><br>Dmitry Silversteyn, who is the writer of this report, covers the BioEconomy and Chemicals &amp; Materials Technology sectors for WTR. Mr. Silversteyn and members of his household have no personal or business-related relationship to the subject company other than providing digital content and any ancillary services WTR may offer.<br><br>Unless otherwise indicated, WTR intends to provide continuing coverage of the covered companies. WTR will notify its readers through website postings or other appropriate means if WTR determines to terminate coverage of any of the companies covered.<br><br>WTR is being compensated for its research by the company which is the subject of this report. WTR receives no more than a maximum of $10,500 per month from a given client and is required to have at least a 6-month commitment. None of the earned fees are contingent on, and WTR’s client agreements are not cancellable for the content of its reports. WTR does not accept any compensation in the form of warrants or stock options or other equity instruments that could increase in value based on positive coverage in its reports.<br><br>WTR or an affiliate may seek to receive compensation for non-research services to covered companies, such as charges for presenting at sponsored investor conferences, distributing press releases, advising on investor relations and broader corporate communications and public relations strategies as well as performing certain other related services (“Ancillary Services”). The companies that WTR covers in our research are not required to purchase or use Ancillary Services that WTR or an affiliate might offer to clients.<br><br>The manner of WTR’s research compensation and Ancillary Services to covered companies raise actual and perceived conflicts of interest. WTR is committed to manage those conflicts to protect its reputation and the objectivity of employees/analysts by adhering to strictly-written compliance guidelines.<br><br>The views and analyses included in our research reports are based on current public information that we consider to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, timeliness, or correctness. Neither we nor our analysts, directors, officers, employees, representatives, independent contractors, agents or affiliate shall be liable for any omissions, errors or inaccuracies, regardless of cause, foreseeability or the lack of timeliness of, or any delay or interruptions in the transmission of our reports to content users. This lack of liability extends to direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, losses, lost income, lost profit or opportunity costs.<br><br>All investment information contained herein should be independently verified by the reader or user of this report. For additional information, all readers of this report are encouraged to visit WTR’s website www.watertowerresearch.com.</p>

KEY HIGHLIGHTS


WTR-CMI last week.&nbsp;In another down week for the market, the S&amp;P 500 retreated 3.3%, while the Russell 2000 lost 4.7% of its value. Our WTR-CMI index of 30 chemicals and materials technology stocks underperformed the broader market, declining 5.5% for the week. All the stocks in our index finished the week in the red, with large cap coating names—AXTA, SHW, and PPG—posting the lowest declines, along with CTVA, which may have benefited from its&nbsp;announcement of a joint development of a new soybean seed with BASF. Prior week’s leader ALB was the worst performer last week, losing 9.8% of its value, as investors may have been disappointed with the&nbsp;company’s decision to keep the Catalysts business.
Damn the torpedoes, part 2.&nbsp;Going full-speed ahead with the development of its Ghana and Quebec mine reserves, while awaiting permitting for its NC mine,&nbsp;PLL announced plans to construct&nbsp;the country’s largest lithium hydroxide production plant in Tennessee, with production targeted for 2025.
US farmers appear to survive 2022 rollercoaster.&nbsp;Despite record high fertilizer, seed, and pesticide costs, not to mention supply disruptions, weather, and fuel costs,&nbsp;the USDA forecasts that US farmers will enjoy record cash incomes&nbsp;in 2022, although net farm income is expected to decline 3.3% from 2021, despite high crop prices due to aforementioned cost headwinds. With input costs continuing to go up (diesel moving north of $5/gal average again) and a slightly dented pocketbook heading into the 2022-23 season, US farmers’ ability to withstand another year of similar shocks remains under question.
Auto sales finally begin to recover.&nbsp;New car registrations in&nbsp;France&nbsp;and&nbsp;the US&nbsp;rose 4% Y/Y in August, albeit coming against increasingly easy year-ago comps. Still, the news is encouraging for Tier 1 auto suppliers such as PPG and AXTA in our index.
Builder confidence sinks.&nbsp;August was the eighth straight month of US&nbsp;builders’ confidence declining, with the August reading of 49 falling below the neutral outlook level for the first time since May 2020. We see this as a broad negative for our sector, especially for SHW, RPM, NGVT, and FULL, for whom the building &amp; construction industry represents a major end- market.

WTR-CMI WEEKLY PERFORMANCE

Ag-Tech and Bio-Ag
LATAM markets take center stage.&nbsp;With everything but the shouting over in the North American ag market for the 2021-22 season, attention is shifting to LATAM’s 2022-23 ag market forecasts. According to the Brazilian National Supply Company (CONAB), both&nbsp;soybean and corn planted acres are expected to grow in Brazil&nbsp;in 2022-23 compared with 2021-22, with more than 100 million acres of soybean being planted in the country for the first time. Still, while acres and yields are expected to grow, farms’ operating margins are forecast to decline versus this year, due primarily to higher input costs that are more than offsetting strong commodity prices and favorable currency exchange rates.
Higher planted acres expected in the region as well as higher use of fertilizers and pesticides are expected to benefit ag input companies. As recent research indicated,&nbsp;large multinationals are outperforming their local peers&nbsp;in this regard when it comes to LATAM markets in general, and Brazil, the region’s largest, in particular. We see this as a positive for companies like CTVA and FMC, given their strong positions in the region. Coming off a solid North American and European season, it appears ag majors are well positioned to continue their positive growth trajectory as sales shift to LATAM and we see current stock prices for both FMS and CTV as attractive entry points for investors looking to benefit from strong demand and pricing dynamics in the ag-input industry.
Ag majors aren’t the only ones likely to benefit from solid market conditions in LATAM. According to the Brazilian Ministry of Agriculture, Livestock and Supply (MAPA),&nbsp;there were 92 biological or low-impact pesticides approved in 2021, down slightly from the 95 approved in 2020. However, continuing expansion of bio-based pesticides, whose review and approvals are given priority by the agency, is a positive for both farmers, who will have more alternatives and solutions should synthetic chemical inputs’ cost and availability remain an issue in 2022-23, and for emerging bio-ag players, such as BIOX and BHIL, among others, who are rapidly developing bio-based alternatives to traditional synthetic pesticides.
Battery Materials &amp; Energy Transformation
Government regulations working at cross purposes to government intentions when it comes to electrification.&nbsp;Even as realization spreads that virtually everywhere one looks, there is a pending shortage of battery-critical materials essential for the electrification revolution to realize its full potential and growing concerns of overreliance on China for such materials already, ramping up local supply of these materials remains problematic. One consistent obstacle is government regulations around mining—the key element in domesticating the battery supply chain and reducing reliance on China and other less-than-friendly regimes. Sweden, home to many materials that could be mined to supply the burgeoning EV battery demand in EU,&nbsp;has been called out recently&nbsp;for its slow regulatory process when it comes to approving new mines in the country. In the US, there is an&nbsp;industry push to shorten and streamline&nbsp;the US mine permit review process. As companies who are looking to develop domestic supply of everything from lithium, to graphite, to rare earths and more prosaic metals such as nickel and copper, continue to bleed red ink due to permitting delays of their major projects, government regulations continue to erect barriers and raise the cost of developing such projects, which appear contrary to many governments’ stated goals and deadlines for sufficiently reducing, if not outright eliminating, dependence on fossil fuels as the basis for the economy. As the saying goes, something’s gotta give.
More investments and intentions announced.&nbsp;Toyota, long viewed as a laggard in EV transition race, announced it will invest close to&nbsp;$5.6 billion into making more EV batteries in the US and Japan, with the goal of raising its production capacity by 40 GWh. The company announced that $2.5 billion of that will go toward its investments into the&nbsp;North Carolina battery plant&nbsp;that will supply batteries for both hybrid as well as fully electric vehicles. Initial production is expected in 2025.
Meanwhile, American Manganese Inc. (OTC: AMYZF) announced that its RecycLiCo Battery Materials arm, in partnership with Kemetco Research Inc., has successfully run a bench test whereby&nbsp;the patented process recovered more than 99% of the lithium&nbsp;contained in lithium-iron-phosphate (LFP) battery cathode materials, extending the process ability, previously demonstrated for nickel-rich, manganese-rich and cobalt-rich cathode chemistries. As we highlighted in our previous issue, work continues on other, non-battery-based energy alternatives, such as hydrogen fuel cells. Recently, German&nbsp;Bosch announced plans to invest $200 million&nbsp;in its US capacity to produce said fuel cells at its South Carolina plant.
Automotive &amp; Transportation
We’re not out of the woods yet.&nbsp;Although new car sales comps are beginning to turn positive, as we mentioned above, we note that August improvements (and we expect the remainder of the year to follow suit) came against record low production levels seen in 2H21 and the global industry remains materially below 2019 production levels. Many issues that have plagued the industry over the last three years remain. Thus,&nbsp;Volvo will temporarily close its plant in the Chinese city&nbsp;of Chengdu due to local coronavirus restrictions.&nbsp;Stellantis halted its Sevel van-making plant&nbsp;in central Italy due to a shortage in supplies of parts.&nbsp;Toyota announced that its global output sank&nbsp;for the fourth straight month in July, as a shortage of semiconductors and supply chain disruptions caused by COVID lockdowns in China hurt production. With the world possibly entering a recession, big ticket items such as new cars may continue to see an uneven recovery in demand, even off the 2021-22 lows. While Y/Y growth in new vehicle registrations is encouraging, ongoing issues with semiconductor and other parts supplies, logistical snags, and on-again-off-again production in China as rolling COVID lockdowns continue, the industry still seems some way off from regaining its footing.
Chemicals and Materials Technology in the News
Architectural coatings market growth intact.&nbsp;A report by&nbsp;Research and Markets forecasts that global demand for architectural coatings&nbsp;will continue to grow at above GDP rates, driven by residential construction and remodeling, as well as commercial and infrastructure projects. The global market for architectural coatings estimated at $64.2 billion in 2022 is projected to grow at a 4.9% CAGR through 2026, reaching $79.5 billion by 2026. While this is a positive for PPG, Masco (NYSE: MAS), which supplies Behr and Kilz brand paints to Home Depot (NYSE: HD), and Berkshire Hathaway’s Benjamin Moore paint, it is particularly impactful for SHW, which dominates the paint market in the US and is one of the leading global suppliers of architectural coatings. Furthermore, with the Do It For Me&nbsp;(DIFM) trend growing once more in the US&nbsp;in the wake of COVID lockdowns, SHW may benefit disproportionately, given its extensive company-owned contractor paint stores across the country and in Canada.
Recent WTR Publications and Upcoming Events
Management Series Report – Loop Industries Founder and CEO Daniel Solomita (NASDAQ: LOOP)
Management Series Report and 2Q22 Update for Westwater Resources (NYSE: WWR)
Fireside Chat with Management of Loop Industries (NASDAQ: LOOP)
Fireside Chat with Management of Westwater Resources (NYSE: WWR)
Initiation of Coverage – Westwater Resources (NYSE: WWR)
DISCLOSURES

Water Tower Research (“WTR”) is a professional publisher of investment research reports on public companies and, to a lesser extent, private firms (“the Companies”). WTR provides investor-focused content and digital distribution strategies designed to help companies communicate with investors.  WTR is not a registered investment adviser or a broker/dealer nor does WTR provide investment banking services. WTR operates as an exempt investment adviser under the so called “publishers’ exemption” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940. WTR does not provide investment ratings / recommendations or price targets on the companies it reports on. Readers are advised that the research reports are published and provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities or the rendering of investment advice. The information provided in this report should not be construed in any manner whatsoever as personalized advice. All users and readers of WTR’s reports are cautioned to consult their own independent financial, tax and legal advisors prior to purchasing or selling securities.  Dmitry Silversteyn, who is the writer of this report, covers the BioEconomy and Chemicals &amp; Materials Technology sectors for WTR. Mr. Silversteyn and members of his household have no personal or business-related relationship to the subject company other than providing digital content and any ancillary services WTR may offer.  Unless otherwise indicated, WTR intends to provide continuing coverage of the covered companies. WTR will notify its readers through website postings or other appropriate means if WTR determines to terminate coverage of any of the companies covered.  WTR is being compensated for its research by the company which is the subject of this report. WTR receives no more than a maximum of $10,500 per month from a given client and is required to have at least a 6-month commitment. None of the earned fees are contingent on, and WTR’s client agreements are not cancellable for the content of its reports. WTR does not accept any compensation in the form of warrants or stock options or other equity instruments that could increase in value based on positive coverage in its reports.  WTR or an affiliate may seek to receive compensation for non-research services to covered companies, such as charges for presenting at sponsored investor conferences, distributing press releases, advising on investor relations and broader corporate communications and public relations strategies as well as performing certain other related services (“Ancillary Services”). The companies that WTR covers in our research are not required to purchase or use Ancillary Services that WTR or an affiliate might offer to clients.  The manner of WTR’s research compensation and Ancillary Services to covered companies raise actual and perceived conflicts of interest. WTR is committed to manage those conflicts to protect its reputation and the objectivity of employees/analysts by adhering to strictly-written compliance guidelines.  The views and analyses included in our research reports are based on current public information that we consider to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, timeliness, or correctness. Neither we nor our analysts, directors, officers, employees, representatives, independent contractors, agents or affiliate shall be liable for any omissions, errors or inaccuracies, regardless of cause, foreseeability or the lack of timeliness of, or any delay or interruptions in the transmission of our reports to content users. This lack of liability extends to direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, losses, lost income, lost profit or opportunity costs.  All investment information contained herein should be independently verified by the reader or user of this report. For additional information, all readers of this report are encouraged to visit WTR’s website www.watertowerresearch.com.

Mat-Chem Notes for the Week Ended September 4 2022

KEY HIGHLIGHTS

WTR-CMI last week.&nbsp;The stock market continued to claw back from summer lows last week, with the S&amp;P 500 appreciating 3.3% W/W and the broader Russell 2000 posting a 4.9% gain. Unlike the previous week however, our WTR-CMI index of 30 chemicals and materials technology stocks outpaced both broader indexes with a 7.8% improvement, led by lithium stocks buoyed by continuing strong demand for EVs and&nbsp;sticky lithium prices that are expected to remain elevated. EAF, whose investors continue to digest the secondary offering, PKE, and AVD were the underperformers in our index last week.
AVNT’s transformation continues.&nbsp;The company announced an&nbsp;agreement to sell its domestic plastic Distribution business to H.I.G. Capital&nbsp;for $950 million in cash, or about 10x TTM EBITDA, a valuation reflective of the business’ strong market position in North America and industry-leading operating margins. Net proceeds of ~$750 million will be used to de-lever the balance sheet following the recent DSM acquisition.
ALB going all-in in North Carolina.&nbsp;The leading global lithium producer has&nbsp;plans for a mega-plant in North Carolina&nbsp;that would process 100,000 metric tons (mt) of lithium annually, using spodumene from the company’s Kings Mountain mine, other sources, as well as recycled material, once widely available. The project is in the pre-feasibility stage with a tentative date of 2029.
July Chinese new car sales show strong growth.&nbsp;It appears that&nbsp;July new passenger car sales in China increased 40% Y/Y&nbsp;as the country continues to recover from COVID lockdowns that crushed late spring demand. However, while&nbsp;new energy vehicle (NEV) sales were up a strong 129% Y/Y&nbsp;in the month, they were down M/M compared with a record June,&nbsp;while overall sales slipped 3% versus June. Also, YTD new passenger vehicle sales were still down 2% compared with the first seven months of 2021. Commercial vehicles were also down 22% Y/Y in July.
Seed treatment applications projected to grow.&nbsp;According to a&nbsp;new study by MarketsandMarkets, the seed treatment market is expected to grow at an 8.3% CAGR over the next five years, even faster for biobased ingredients, which is a positive for BIOX, which is building all-biobased seed treatment options.

WTR-CMI WEEKLY PERFORMANCE


Source: YCharts; August 12 close

Ag-Tech and Bio-Ag
A tough end to a tough season.&nbsp;In the 2021-22 ag season, farmers had to deal with skyrocketing prices for ag inputs, from seeds to fertilizers to pesticides, as well as surging diesel and gasoline costs, supply chain disruptions, and uncooperative weather. Despite all that, US farmers planted near-record acres and were expecting, with the USDA’s blessing, near-record yields for their row crops. However, late plantings, high heat, drought, and high winds appear to be taking the shine off bullish bushel expectations. In its August 12 report,&nbsp;the USDA&nbsp;reduced yield expectations for corn and raised them slightly for soybean, although the latter has drawn some skepticism and may or may not be confirmed with field tours. In fact, lack of rain appears to have affected crop conditions in&nbsp;Nebraska&nbsp;and&nbsp;Iowa, shaving off the more optimistic yield projections.
Despite still high commodity prices and, in our opinion, high likelihood that they will remain elevated into 2023, given global supply and food scarcity concerns, 2022 farmer income may be down more than 50% from a record 2021 due mainly to record price increases in crop inputs, fuel, and energy. A report from&nbsp;the University of Illinois forecasts&nbsp;that with input and farmland cost continuing to increase and revenues staying flattish, farm income in 2022-23 may decline as much as 80% compared with this year! That would not be good news for farmers or major suppliers in the ag industry, as it is difficult to imagine farmers maintaining their purchasing power and being able to afford the volume and price of inputs that they were able to handle this year. While this may provide opportunities for emerging biobased input companies, like BIOX and BHIL, to gain market share and expand their geographic and crop footprint, it may not be good news for ag input majors, such as CTVA, AVD, FMC, and CF, as they may experience demand destruction due to high prices, seed margin pressures from elevated energy and raw material costs, and may have to reduce their own prices to sustain demand.
Battery Materials &amp; Energy Transformation
China’s dominance remains conspicuous.&nbsp;While several companies are attempting to establish a presence in the EV battery industry, including some profiled in these updates,&nbsp;half of all batteries installed in 1H22 came from two Chinese companies—CATL and BYD—according to market research company SNE Research, underscoring China’s continued dominance and control over the EV industry supply chain, from lithium and graphite materials to cell and battery pack manufacturing. Although the country is the largest EV market, growing at the fastest pace, which helps explain the initial rush by global battery and materials players to establish operations in China, the COVID-induced supply chain disruptions, the war in Ukraine and its economic aftermath, and China’s increasingly aggressive posture toward Taiwan, APAC, and the West, have given industry players pause and led to increasing efforts to domesticate supply of critical materials and components, or at the very least diversify the supply away from China. Clearly, these efforts are still in the very early stages with few noticeable results as of yet. Nonetheless, we believe domestic suppliers, as well as those outside of China, will continue to receive more attention and capital from both existing and emerging battery manufacturers, as well as EV OEMs—Tesla’s recent contracts worth $5 billion&nbsp;with Indonesia’s nickel converters being but the latest example. We see these trends as being highly positive for companies looking to establish domestic lithium and graphite production, such as ALB, PLL, LAC, WWR, and NMG.
Yet another way to skin the EV battery cat.&nbsp;As the green energy industry continues to grow and evolve, new technologies, chemistries, and manufacturing methods are being explored and developed to help the world accelerate the transition to a non-fossil energy paradigm. Such efforts range from novel sources of lithium (like geothermal wells and the Great Salt Lake) to solid state battery technologies to novel battery cathode and anode chemistries. Yet another wrinkle being added is 3-D printing of batteries, as exemplified by&nbsp;Sakuu, a California-based developer&nbsp;of such technologies, which recently opened a new engineering center in Silicon Valley, having raised more than $60 million in funding earlier this year. Solid state batteries offer real advantages versus current EV battery technology, but efforts to successfully scale up pilot plant processes have so far fallen short of expectations. Nevertheless, the technology remains an attractive area of R&amp;D and perhaps the 3D printing approach can be the final piece of the puzzle to commercial production and industry acceptance.
Chemicals and Materials Technology in the News
Five- to 10-year growth prospects remain robust for many industry sectors.&nbsp;Used in everything from adhesives to coatings to composites, epoxy resins are an important part of the chemicals and materials industry. A recent report by Fact.MR, a market research and competitive intelligence provider, forecasts that the&nbsp;epoxy resin industry will experience a 6.9% CAGR over this decade, or more than twice the expected growth of global GDP, making the sector a clear GDP-plus grower, which should appeal to growth investors. Light-weighting in automotive and transportation applications, superior strength in wind and solar applications, and growing usage in construction applications are driving this strong growth. We see this as a positive for several companies in our index, including AVNT, FUL, HXL, and RPM, as well as commodity chemicals players such as DOW and HUN. The&nbsp;global plastics market, which is expected to reach nearly $800 billion in 2022 is projected to grow at slightly GDP-plus rate of 3.7% CAGR through 2032, driven by continuing product substitution and light-weighting trends and despite the increasing efforts to reduce or eliminate single use plastics. Within this massive markets, certain sub-sectors are expected to see even faster growth. Thus, the&nbsp;polyolefin elastomer and plastomer market&nbsp;is expected to grow at nearly double the rate of the plastics industry overall, or a 7.6% CAGR through 2031, reaching nearly $8 billion in sales by that time. And the much larger&nbsp;plastic market for automotive applications, which is valued at $31 billion annually, is expected to grow at a 5.3% CAGR and reach $45 billion by 2028. We see these trends as being highly beneficial to AVNT, a global leader in engineered plastics and composites. We also believe the growing trend toward recyclability and away from fossil-based raw materials will benefit companies such as Loop Industries, Inc. (NASDAQ: LOOP).
High prices and stalled economy are not a good recipe.&nbsp;Even as&nbsp;pricing dynamics for basic chemicals&nbsp;and raw materials are improving, as prices of commodities come off early summer highs, the global economic slowdown, and outright recession that may be overtaking developed countries in 2H22 are continuing to&nbsp;worry both company executives and investors. The chemicals and materials technology sector, situated between basic commodity chemicals producers and industry and consumer end-customers, may be better positioned to weather these headwinds versus other markets, as they are likely to continue to drive higher prices into the market in 2H22 and perhaps even 1H23, while seeing their RM costs begin to decline, at least sequentially. As these companies’ cost structure contain higher levels of variable versus fixed costs, the negative impact on margins of expected volume declines won’t be nearly as strong as the positive impact of shrinking RM-cost and selling-price spreads, helping margin recovery and driving higher valuations and stock prices in the process.
Circular economy.&nbsp;Speaking of packaging and single-use plastics, industry efforts continue to address the sustainability characteristics of packaging in general and plastic packaging in particular. Certainly a major force behind the evolution is the&nbsp;increasing government focus on the issue of sustainability and circular economy, with ever stricter regulations and out-year targets for carbon net-zero, and other societal initiatives. However, just as important is the voice of the consumer and business’ efforts to innovate to drive product differentiation in an increasingly competitive market segments. Coca-Cola’s drive to&nbsp;reinvent the water/pop plastic bottle with high recycled content, in some cases as high as 100%, is one such example. A new kid on the block—Loop Industries—whose technology allows for the production of virgin-quality PET resins from no- to low-value plastic waste specifically for beverage bottles and other packaging applications may stand to benefit from brand owners developing programs to meet regulatory goals on recycled content and circular economy. In fact, the company already has a success story with the 2022 launch of its branded Infinite LOOPTM&nbsp;PET resin bottle with Avian in South Korea and the more recent partnership with Danone.
Rating and Price Target Changes
ALB –&nbsp;Deutsche Bank raise its price target (PT) to $270 from $255 and reiterated its Buy recommendation.
CMP –&nbsp;Stifel raised its PT to $70 from $69 and reiterated its Buy rating.
CTVA –&nbsp;JP Morgan upgraded the stock to Buy from Neutral and raised its PT to $63 from $58; Roth raised its PT to $74 from $67 and reiterated its Buy rating; Citigroup raised its PT to $69 from $63 and reiterated its Buy rating; Deutsche Bank lowered its PT to $68 from $72 and reiterated its Buy rating; Mizuho Securities raised its PT to $69 from $68 and reiterated its Buy rating; RBC raised its PT to $72 from $67 and reiterated its Outperform rating; Berenberg Bank raised its PT to $66 from $58 and reiterated its Buy recommendation.
EAF –&nbsp;Citigroup lowered its PT to $7.50 from $10 and maintained its Neutral rating; Credit Suisse lowered its PT to $13 from $16 and reiterated its Outperform rating.
KWR –&nbsp;Deutsche Bank raised its PT to $210 from $175 and reiterated its Buy recommendation.
VVV –&nbsp;Citigroup lowered its PT to $35 from $37 and reiterated its Buy recommendation.
Recent WTR Publications and Upcoming Events
Upcoming Events
Fireside Chat with Management of Loop Industries, Inc. (NASDAQ: LOOP)
Recent Events and Publications
Management Series Report and 2Q22 Update for Westwater Resources, Inc. (NYSE: WWR)
Fireside Chat with Management of Westwater Resources (NYSE: WWR)
Initiation of Coverage – Westwater Resources, Inc.
Management Series Report – Marrone Bio Innovations CEO Kevin Helash
DISCLOSURES

Water Tower Research (“WTR”) is a professional publisher of investment research reports on public companies and, to a lesser extent, private firms (“the Companies”). WTR provides investor-focused content and digital distribution strategies designed to help companies communicate with investors.  WTR is not a registered investment adviser or a broker/dealer nor does WTR provide investment banking services. WTR operates as an exempt investment adviser under the so called “publishers’ exemption” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940. WTR does not provide investment ratings / recommendations or price targets on the companies it reports on. Readers are advised that the research reports are published and provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities or the rendering of investment advice. The information provided in this report should not be construed in any manner whatsoever as personalized advice. All users and readers of WTR’s reports are cautioned to consult their own independent financial, tax and legal advisors prior to purchasing or selling securities.  Dmitry Silversteyn, who is the writer of this report, covers the BioEconomy and Chemicals &amp; Materials Technology sectors for WTR. Mr. Silversteyn and members of his household have no personal or business-related relationship to the subject company other than providing digital content and any ancillary services WTR may offer.  Unless otherwise indicated, WTR intends to provide continuing coverage of the covered companies. WTR will notify its readers through website postings or other appropriate means if WTR determines to terminate coverage of any of the companies covered.  WTR is being compensated for its research by the company which is the subject of this report. WTR receives no more than a maximum of $10,500 per month from a given client and is required to have at least a 6-month commitment. None of the earned fees are contingent on, and WTR’s client agreements are not cancellable for the content of its reports. WTR does not accept any compensation in the form of warrants or stock options or other equity instruments that could increase in value based on positive coverage in its reports.  WTR or an affiliate may seek to receive compensation for non-research services to covered companies, such as charges for presenting at sponsored investor conferences, distributing press releases, advising on investor relations and broader corporate communications and public relations strategies as well as performing certain other related services (“Ancillary Services”). The companies that WTR covers in our research are not required to purchase or use Ancillary Services that WTR or an affiliate might offer to clients.  The manner of WTR’s research compensation and Ancillary Services to covered companies raise actual and perceived conflicts of interest. WTR is committed to manage those conflicts to protect its reputation and the objectivity of employees/analysts by adhering to strictly-written compliance guidelines.  The views and analyses included in our research reports are based on current public information that we consider to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, timeliness, or correctness. Neither we nor our analysts, directors, officers, employees, representatives, independent contractors, agents or affiliate shall be liable for any omissions, errors or inaccuracies, regardless of cause, foreseeability or the lack of timeliness of, or any delay or interruptions in the transmission of our reports to content users. This lack of liability extends to direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, losses, lost income, lost profit or opportunity costs.  All investment information contained herein should be independently verified by the reader or user of this report. For additional information, all readers of this report are encouraged to visit WTR’s website www.watertowerresearch.com.

Mat-Chem Notes for the Week Ended August 14, 2022

KEY HIGHLIGHTS


WTR-CMI last week.&nbsp;Our WTR-CMI index of 30 chemicals and materials technology stocks couldn’t keep up with the broader market last week, slipping 0.4% versus the prior week, while the S&amp;P 500 posted a 0.4% appreciation and the Russell 2000 rallied 1.9% for the week. Strong 2Q22 results and a strong outlook drove KWR stock up 15.3% and contributed to MTRN’s 8.6% appreciation, with LAC’s 7.7% improvement rounding out the top performers for the week. ECVT’s larger&nbsp;secondary offering priced at $8.75&nbsp;resulted in a 12.9% pullback for the stock, while VVV declined 11% despite announcing the&nbsp;sale of its Global Products business to Aramco, as investors remained concerned about margin pressures and longer-term prospects for a company still largely focused on ICE vehicle maintenance. EAF’s (9.6%) weekly performance also came courtesy of the outlook it provided on its 2Q22 earnings call, which highlighted slowing steel production and elevated costs.
Economic anxiety growing.&nbsp;Concerns over the&nbsp;impact of reduced gas supply from Russia&nbsp;and its impact on industrial production in the country were recently voiced as a reason for the cautious outlook for the balance of 2022 and into 2023, according to Covestro Germany. In yet another sign of a growing economic slowdown, domestic&nbsp;organic produce volumes declined 2.8%&nbsp;Y/Y in 2Q22, as prices went up 6.7%, indicating that consumers are becoming more price conscious as inflationary pressures heat up. This would not be good news for consumer-centric companies such as SHW, PPG, RPM, and VVV, as customer trade-downs may add mix pressures to the volume and FX headwinds.
Chip crunch prompts greater OEM involvement.&nbsp;As the chip shortage for the automotive industry&nbsp;continues to take a bite out of global production, OEMs are being looked to as reliable funding partners for future semiconductor fabs, as&nbsp;chip manufacturers look to offload some of the funding burden&nbsp;onto the ultimate customer in order to ensure the situation does not repeat once the current crunch is over,&nbsp;sometime in 2023.
LTHM gets prepayment from GM.&nbsp;In the last issue, we highlighted GM’s supply agreement with LTHM and last week we learned that the&nbsp;auto OEM is prepaying LTHM $198 million&nbsp;to ensure a six-year contractual supply—another indication of growing material availability concerns in the EV industry.

WTR-CMI WEEKLY PERFORMANCE


Source: YCharts; August 5 close

Ag-Tech and Bio-Ag
Farmland acres grow globally but shrink in the US.&nbsp;According to a recent article,&nbsp;global farm acreage has increased&nbsp;in 2000’s after the flattish 1980-2000 period, with most of the growth coming from LATAM, India, and former CIS regions, with oilseed crops, particularly soybeans, accounting for most of the increase. Conversely,&nbsp;domestic farm acres shrank&nbsp;over the past two decades, as succession decisions and urban and suburban development are removing 2,000 acres per day from domestic farming and grazing lands. We mentioned this trend in our previous reports and see this as a driver of adoption of newer ag technologies, including precision farming, seed treatment, and bio-based pesticide and fertilizer alternatives, which are all designed to improve yields and minimize environmental impact in order to produce more without needing more farmland. Companies such as BHIL and BIOX, as well as FMC, CTVA, and AVD, stand to benefit as use of inputs/acre grows, with BIOX and FMC being particularly well positioned given their strong LATAM presence and FMC’s over-representation in soybean and rapeseed markets.
As concerns over food scarcity grow, government regulators turn a deaf ear.&nbsp;While the Ukraine/Russia agreement that allowed exports of Ukrainian grain to resume is encouraging, concerns are rising over the 2022-23 Ukrainian crop season.&nbsp;According to the USDA, Ukrainian production of sunflower seeds is expected to decline 37% versus this year, with Ukraine being the number one producer of sunflower seeds. The report also predicts a 35% Y/Y decline in wheat production in the 2022-23 season (Ukraine is the ninth-largest wheat producer in the world) and a whopping 54% drop in the country’s corn production (Ukraine is the sixth-largest corn producer in the world). And that’s if the war’s impact on Ukraine’s farming heartland doesn’t get worse! As a major exporter of grain and ag products, Ukraine’s limited ability to export foodstuff this year and uncertainty over supply next season is raising concerns among major importing regions such as India, Africa, and Asia as to their ability to provide sufficient food for their populace.
It would seem that in this environment, governments would be doing all they could to ensure the adequate supply of ag products to the global market, or at least their own. However, that may not be the case. As we highlighted in the last issue, Netherlands regulators are putting environmental regulations in place that would raise the cost (if not make it outright impossible) for smaller Dutch farmers to continue to produce, which has led to widespread farmer demonstrations across the country. Holland may not be alone in this drive to reduce farming’s impact on the environment at any cost. Its example&nbsp;may be followed by Canada and Ireland&nbsp;and there is concern that similar environmental rules, which seem to be specifically aimed at farming, may come to the US, given the green agenda of the current administration. Tone deaf does not begin to describe these initiatives and efforts, in our opinion.
Automotive &amp; Transportation
July picks up where June left off.&nbsp;The top three economies in Europe are reporting another Y/Y decline in July new car registrations.&nbsp;Germany saw a 13% drop, while&nbsp;the UK posted a slightly less onerous 9% Y/Y&nbsp;decline in new car registrations last month.&nbsp;French registrations&nbsp;also declined, but at a slightly slower 7% pace. And while the impact of chip shortages is waning on a Y/Y basis as we mentioned previously and the Y/Y declines in registrations may also show better comps in 2H22, a recovery in demand still lies beyond the line of sight, as new obstacles replace the old concerns. Gas rationing in Europe due to Russia’s influence over gas supply to the region, higher model prices as OEMs work to preserve margins in&nbsp;a rising cost environment, and slowing the economy’s impact on consumer confidence&nbsp;are likely to continue to weigh on auto production and sales well into 2023. BMW for example, while looking for a recovery in 2H22, had to reduce its full-year 2022 outlook&nbsp;given the slower 1H22 and uncertainty and volatility of economic and geopolitical factors that make more optimistic predictions difficult at this time.
We continue to see risk for companies in our index with high exposure to the automotive and transportation sectors, including PPG, AXTA, and to a lesser extent, AVNT, FUL, and HXL.
Battery Materials &amp; EV Transformation
Technology, methods, and supply chain continue to evolve.&nbsp;Global&nbsp;automotive manufacturers and their suppliers are looking to invest half a trillion dollars&nbsp;over the next several years in order to prepare the industry to transition to an EV architecture more fully. The investments range from new EV factories, battery cell and battery plants, new and expanded mining and conversion plant infrastructure for critical materials, and the growing realization of the need to reduce the industry’s dependence on China as the primary source EV-related supply. The recent&nbsp;decision by CATL to delay&nbsp;finalizing its plans for a North American battery plant underscores those concerns. It can therefore be seen as a sign of desperate times that&nbsp;Tesla felt it necessary to sign supply agreements with two Chinese cobalt processors&nbsp;in an effort to ensure it has adequate access to that important battery metal. Can one blame it given&nbsp;the outlook for cobalt?
Looking high and low for critical materials.&nbsp;Almost every long-term projection of EV growth and corresponding growth in critical metals needed for EV batteries includes a widening disparity between expected demand and available, highly probable, and even somewhat probable supply for most of these materials—lithium first and foremost. It is not surprising then that both auto OEMs and battery companies are looking to sign supply deals with existing and even speculative suppliers. Case in point is the recent announcement of a&nbsp;supply agreement between Prime Planet Energy &amp; Solutions, the battery joint venture of Toyota and Panasonic, and Ioneer Ltd.&nbsp;(OTC: GSCCF), a development-stage company whose lithium production plant isn’t expected to commence construction until 4Q22, with an uncertain timeline to commercial production. Another source of critical materials for batteries is end-of-life EV batteries themselves. In the spirit of environmental responsibility and a circular economy,&nbsp;Ascend Elements has announced plans to invest up to $1 billion&nbsp;in a factory in Kentucky for the production of battery cathode materials for EVs. The plant will use black mass from recycled batteries to directly produce cathode materials for the EV market. Production is scheduled to start at the end of 2023, with capacity to produce enough cathode materials for 250,000 EVs annually. Similarly, British battery developer&nbsp;Nexeon secured more than $200 million in funding&nbsp;to develop its battery materials manufacturing operations for the production of silicone-based anode materials for EV batteries, showing that it’s not just the cathode-side metals, such as lithium and cobalt, that are subject to supply concerns and therefore provide opportunities for funding and growth. We also note that one of the companies in our WTR-CMI index, namely&nbsp;NGVT, took part in this round of funding&nbsp;for Nexeon.
Graphite market update.&nbsp;Speaking of anode materials, an often overlooked part of an EV battery is the graphite that goes into the battery anode. As with other critical battery materials, a severe shortage of supply versus projected demand is envisioned for the graphite market. However, until now, this pending imbalance appears to be getting little attention from investors. As the realization that the EV industry is 100% dependent on China for&nbsp;battery-grade graphite spreads, we believe this lack of attention will be addressed. One company that is looking to launch domestic production of battery-grade graphite materials is Westwater Resources (NYSE: WWR). We recently hosted a fireside chat with WWR management to discuss this apparent lack of investor understanding of the supply-demand imbalance and overreliance on China (see link below). The company will update investors on its progress Thursday, August 11 at 11:00 am EDT when management will host its 2Q22 call.
Chemicals and Materials Technology in the News
NGVT.&nbsp;In addition to making an aforementioned investment in Nexeon, the company also announced the&nbsp;acquisition of privately owned Ozark Materials, LLC and Ozark Logistics, LLC (“Ozark Materials”)&nbsp;for $325 million. The acquisition is expected to close by early 4Q22. The acquired business is on pace for annual revenues of approximately $150 million, with a ~20% EBITDA margin in FY23.
MTRN.&nbsp;The company announced that it has established a new facility in Milwaukee, Wisconsin to accelerate the growth of advanced chemical solutions for the semiconductor and EV battery markets. The new 150,000-square-foot facility expands the company’s capacity to produce Atomic Layer Deposition (ALD) materials for the most sophisticated semiconductor chips and provide advanced chemicals for the development of next-generation battery technology for EVs.
Circular Economy.&nbsp;Green Dot Bioplastics, a developer and supplier of bioplastic materials for innovative, sustainable end-uses,&nbsp;announced an addition of nine new grades of bioplastics&nbsp;aimed at single-use and plastic packaging markets, as the industry looks to adjust to increasingly strict government mandates and regulations related to single-use plastics. In an effort to support similar conversions, in this case to post-consumer recycled plastics,&nbsp;AVNT announced its post-consumer recycled (PCR) Color Prediction Service&nbsp;for polyolefins and polyethylene terephthalate (PET) resins as well as its new polyolefin antioxidants, Cesa Nox A4R Additives for recycled plastics, thereby lowering adoption obstacles for consumers looking to incorporate post-consumer recycled plastic into their product designs.
EAF.&nbsp;While GrafTech’s 2Q22 results and guidance for the balance of 2022 left analysts and investors unimpressed with the company’s near-term margin and volume headwinds, investors may be missing the longer-term prospects for the company as its graphite electrodes going into electric ark furnaces (EAF) are enabling a transition from high carbon-producing coal furnaces to less environmentally impactful EAF technologies, which also use steel scrap, rather than iron ore, as a raw material.&nbsp;A recent study confirming the lower carbon-generating benefits of EAF&nbsp;versus conventional smelters underscores the environmental tailwind investors may be missing in evaluating EAF’s current volume issues in an environment of declining steel production globally.
Rating and Price Target Changes
ALB –&nbsp;UBS raised its price target (PT) to $265 from $218 but maintained its Neutral rating; Oppenheimer raised its PT to $440 from $368 and reiterated its Outperform rating.
CTVA –&nbsp;Credit Suisse raised its PT to $72 from $68 and reiterated its Outperform rating; UBS raised its PT to $66 from $64 and reiterated its Buy recommendation; CFRA lowered its PT to $61 from $65 and maintained its Hold rating.
EMN –&nbsp;CFRA reiterated its Buy rating and $125 PT; Citigroup downgraded the stock to Neutral from Buy; KeyBank raised its PT to $125 from $124 and reiterated its Overweight rating; Deutsche Bank lowered its PT to $115 from $125 and reiterated its Buy rating; Stifel Nicolaus lowered its PT to $134 from $155 and reiterated its Buy rating; Barclays lowered its PT to $110 from $120 and maintained its Equal Weight rating; Wells Fargo lowered its PT to $110 from $115 and reiterated its Overweight rating; RBC raised its PT to $97 from $94 and maintained its Sector Perform rating.
FMC –&nbsp;Credit Suisse lowered its PT to $105 from $109 and reiterated its Underperform rating; CFRA lowered its PT to $120 from $126 and maintained its Hold rating; Mizuho Securities lowered its PT to $144 from $149 and reiterated its Buy rating.
FUL –&nbsp;Berenberg Bank lowered its PT to $82 from $85 and reiterated its Buy recommendation.
HXL –&nbsp;BMO raised its PT to $66 from $57 and maintained its Market Perform rating.
LTHM –&nbsp;CFRA lowered its PT to $28 from $36 and reiterated its Buy rating; Mizuho Securities lowered its PT to $30 from $34 and maintained its Neutral rating; Deutsche Bank raised its PT to $26 from $24 and maintained its Hold rating.
VVV –&nbsp;CFRA downgraded the stock to Hold from Buy and maintained its $34 PT.
Recent WTR Publications and Upcoming Events
Fireside Chat with Management of Westwater Resources, Inc.
Initiation of Coverage – Westwater Resources, Inc.
Management Series Report – Marrone Bio Innovations Inc. CEO Kevin Helash
Management Series Report – Westwater Resources, Inc. Executive Chairman Terence Cryan and CAO Steven Cates
DISCLOSURES

Water Tower Research (“WTR”) is a professional publisher of investment research reports on public companies and, to a lesser extent, private firms (“the Companies”). WTR provides investor-focused content and digital distribution strategies designed to help companies communicate with investors.  WTR is not a registered investment adviser or a broker/dealer nor does WTR provide investment banking services. WTR operates as an exempt investment adviser under the so called “publishers’ exemption” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940. WTR does not provide investment ratings / recommendations or price targets on the companies it reports on. Readers are advised that the research reports are published and provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities or the rendering of investment advice. The information provided in this report should not be construed in any manner whatsoever as personalized advice. All users and readers of WTR’s reports are cautioned to consult their own independent financial, tax and legal advisors prior to purchasing or selling securities.  Dmitry Silversteyn, who is the writer of this report, covers the BioEconomy and Chemicals &amp; Materials Technology sectors for WTR. Mr. Silversteyn and members of his household have no personal or business-related relationship to the subject company other than providing digital content and any ancillary services WTR may offer.  Unless otherwise indicated, WTR intends to provide continuing coverage of the covered companies. WTR will notify its readers through website postings or other appropriate means if WTR determines to terminate coverage of any of the companies covered.  In certain instances, including this report, WTR will write research covering non-clients. Readers should assume that WTR may seek to turn these non-paying companies into paying clients. Likewise, WTR may seek to transform these non-clients into paying clients of it or of its affiliate, which provides services such as presenting at sponsored investor conferences, distributing press releases, advising on investor relations and broader corporate communications and public relations strategies as well as performing certain other related services (“Ancillary Services”). The companies that WTR covers in our research are not required to purchase or use Ancillary Services of WTR or an affiliate might offer to clients.  The manner of WTR’s potential research compensation and Ancillary Services to covered companies raise actual and perceived conflicts of interest. WTR is committed to manage those conflicts to protect its reputation and the objectivity of employees/analysts by adhering to strictly written compliance guidelines.  The views and analyses included in our research reports are based on current public information that we consider to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, timeliness, or correctness. Neither we nor our analysts, directors, officers, employees, representatives, independent contractors or agents shall be liable for any omissions, errors or inaccuracies, regardless of cause, foreseeability or the lack of timeliness of, or any delay or interruptions in the transmission of our reports to content users. This lack of liability extends to direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, losses, lost income, lost profit or opportunity costs.  All investment information contained herein should be independently verified by the reader or user of this report. For additional information, all readers of this report are encouraged to visit WTR’s website www.watertowerresearch.com.

Mat-Chem Notes for the Week Ended August 7, 2022

<h2>KEY HIGHLIGHTS</h2>
<div></div>
<ul>
<li>WTR-CMI last week.&nbsp;In what was another positive week for the stock market, both the Russell 2000 and S&amp;P 500 appreciated 4.3% versus week-ago levels, while our WTR-CMI index of 30 chemicals and materials technology stocks outperformed the broader market with a 4.9% return. Lithium stocks once again led our index higher, as PLL, LAC, and ALB benefited from improved investor sentiment on lithium demand and, more importantly, pricing by appreciating 21.1%, 12.3% and 10.3%, respectively. LTHM, while not quite keeping up the pace with an 8.9% improvement,&nbsp;signed a long-term lithium hydroxide supply agreement with GM, which also signed a&nbsp;long-term supply deal with South Korean LG Chem for battery cathodes. At the other end of the performance spectrum, SHW disappointed investors with its 2H22 guidance and saw its stock decline 6.6% for the week, with ASH’s 4.1% decline following an earnings beat and raise bounce the prior week and AXTA posting a 3.3% decline as its 2Q22 earrings and guidance left investors unimpressed, while the&nbsp;CEO transition, which the company announced at the same time, may also have contributed to shareholder unease.</li>
<li>Ford touts sufficient materials for EV push.&nbsp;Like many auto OEMs, Ford is not leaving the fate of its EV transition in the hands of Tier-I suppliers and instead is signing supply agreements directly with critical materials suppliers. The company recently&nbsp;announced sufficient lithium and nickel supply contracts&nbsp;to support its projected EV production into 2026.</li>
<li>China’s July new car sales continue to rebound.&nbsp;China Automobile Dealers Association expects the country’s new car sales&nbsp;to follow June’s trend of Y/Y improvement with an 18% Y/Y increase in July, as COVID lockdown restrictions continue to ease and the government’s incentives for gasoline powered vehicles kick in. NEV vehicle growth is expected to top 100% Y/Y as well.</li>
<li>MTRN commissions commercial plant.&nbsp;Materion and Kairos Power have&nbsp;jointly commissioned a Molten Salt Purification Plant (MSPP)&nbsp;for the production of beryllium fluoride and lithium fluoride for use as heat transfer fluid for the Kairos’ next generation Fluoride Salt-Cooled High-Temperature Reactor (KP-FHR) nuclear reactors.</li>
</ul>
<h2>WTR-CMI WEEKLY PERFORMANCE</h2>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/290/054/original/image_444686316221659573234657.png?1659573237" class="editor-image img-responsive" data-smartkarma-image-id="290054"></figure>
<h2>Ag-Tech and Bio-Ag</h2>
<p>Fertilizer availability (and price) remains a concern heading into 2023.&nbsp;Although fertilizer prices have come off the recent highs,&nbsp;they remain at multi-year high levels heading into the 2023 season. And it doesn’t look like prices will get much lower prior to the time farmers may want to think about locking in at least some supply at prevailing prices. Concerns remain regarding European production, particularly for nitrogen fertilizers (ammonia and urea) due to reductions in Russian-supplied natural gas and the resulting impact on both volume of fertilizer production and the cost of fertilizers in Europe. Adding further concerns is the possibility that China, which is a large producer and exporter of fertilizers, may reduce its exports due to high energy costs and increased domestic demand. Therefore, while US farmers may continue to struggle to secure sufficient supply of chemical fertilizers at acceptable prices next year yet again, the situation may also provide opportunities for American-based companies, such as CF Industries (NYSE: CF), to increase their market share and maintain elevated prices that should contribute to stronger margins. It may also create an opportunity for bio-based fertilizer companies to expand their market share.</p>
<h2>Automotive &amp; Transportation</h2>
<p>High natural gas prices and uncertain availability to affect German production.&nbsp;As Russia continues to play games with natural gas supplies to Europe, the region’s governments are asking their industries to work to reduce the use of natural gas for the time being.&nbsp;The German automotive industry is not an exception, and while steps to reduce gas use have been or are being take, the industry warns that they are temporary and further reductions would require easing of emission regulations and even then, may affect output. This may suggest continuing struggles for the European automotive market to regain its stride after two years of downward volatility. Meanwhile, commercial vehicle registrations in Europe&nbsp;continued to decline, posting a 22.5% drop Y/Y in June, with first half of the year registrations down 20.3% Y/Y.</p>
<p>Toyota struggles with production in Japan.&nbsp;The company had to&nbsp;suspend night shift production&nbsp;at one of its plants in Japan on re-emerging COVID concerns and continues to see domestic production decline as a result of supply chain disruptions and COVID protocols. The company has been able to&nbsp;offset reduced domestic production with higher output from its global network outside Japan, with foreign plant output growing 5.6% Y/Y through June, helping to offset an 18% plunge in Japanese plants’ output. Still, for the first six months of 2022, Toyota saw its total global output decline almost 4% Y/Y.</p>
<p>With car builds still down in most geographies Y/Y and likely to finish 2022 below 2021 levels, companies in our index with significant exposure to the automotive and transportation markets may continue to struggle with top-line growth despite higher prices, as sluggish volumes and negative FX headwind combined with still elevated raw material costs offset internal cost savings efforts and pricing initiatives leading to top-line and margin performance that may disappoint versus current forecasts. We therefore remain cautious on PPG and AXTA and, to a lesser extent, on HXL, AVNT, and FUL.</p>
<h2>Rating and Price Target Changes</h2>
<p>ALB –&nbsp;RBC raised its price target (PT) to $331 from $324 and reiterated its Outperform rating.</p>
<p>ASH –&nbsp;UBS raised its PT to $131 from $127 and reiterated its Buy rating; Wells Fargo also raised its PT to $110 from $107 and maintained its Equal Weight rating; BMO likewise raised its PT to $135 from $129 and reiterated its Outperform rating.</p>
<p>AVNT –&nbsp;Baird lowered its PT to $56 from $63 and reiterated its Outperform rating; Stifel also lowered its PT to $70 from $76 and reiterated its Buy recommendation; Morgan Stanley lowered its PT to $50 from $63 and maintained its Equal Weight recommendation.</p>
<p>AXTA –&nbsp;KeyBank raised its PT to $31 from $30 and reiterated its Overweight rating; JP Morgan lowered its PT to $32 from $35, while reiterating its Overweight rating; Wells Fargo raised its PT to $26 from $25 and maintained its Equal Weight rating; Baird lowered its PT to $53 from $38 and reiterated its Outperform rating.</p>
<p>CTVA –&nbsp;Mizuho Securities raised its PT to $68 from $67 and reiterated its Buy recommendation.</p>
<p>ECL –&nbsp;Deutsche Bank lowered its PT to $180 from $195 and reiterated its Buy rating; BMO lowered its PT to $172 from $181 and maintained its Market Perform rating; Mizuho Securities lowered its PT to $178 from $183 and maintained its Neutral rating; Baird lowered its PT to $171 from $193 and reiterated its Outperform rating; UBS lowered its PT to $198 from $205 and reiterated its Buy recommendation.</p>
<p>EMN –&nbsp;UBS lowered its PT to $118 from $121 and reiterated its Buy recommendation.</p>
<p>FMC –&nbsp;RBC lowered its PT to $139 from $152 and reiterated its Outperform rating; Mizuho Securities lowered its PT to $149 from $155 and reiterated its Buy recommendation.</p>
<p>HXL –&nbsp;Vertical Research raised its PT to $60 from $58 and reiterated its Buy rating; Morgan Stanley raised its PT to $59 from $57 and reiterated its Underweight recommendation.</p>
<p>PPG –&nbsp;Deutsche Bank lowered its PT to $150 from $15 and reiterated its Buy rating; Wells Fargo raised its PT to $135 from $126 and maintained its Equal Weight rating; Mizuho Securities raised its PT to $163 from $162 and reiterated its Buy rating.</p>
<p>RPM –&nbsp;UBS raised its PT to $99 from $96 and reiterated its Buy rating; RBC raised its PT to $89 from $86 and maintained its Sector Perform rating.</p>
<p>SHW –&nbsp;KeyBank lowered its PT to $290 from $335 and reiterated its Overweight rating; Deutsche Bank lowered its PT to $275 from $315 and reiterated its Buy rating; BMO lowered its PT to $251 from $274 and maintained its Market Perform rating; Wells Fargo lowered its PT to $250 from $274 and maintained its Equal Weight rating; JP Morgan lowered its PT to $275 from $300 and reiterated its Overweight rating; Morgan Stanley lowered its PT to $300 from $330 and reiterated its Overweight rating; Credit Suisse lowered its PT to $225 from $245 and reiterated its Underperform rating; UBS lowered its PT to $257 from $265 and maintained its Neutral rating; Vertical Research raised its PT to $252 from $241 and maintained its Hold rating; Berenberg Bank lowered its PT to $250 from $285 and maintained its Hold rating; RBC lowered its PT to 300 from $312 and reiterated its Outperform rating.</p>
<h2>Recent WTR Publications and Upcoming Events</h2>
<h3>Upcoming</h3>
<p>Fireside Chat with Management of Westwater Resources, Inc. (NYSE: WWR) – August 4 at 11:00 am EDT</p>
<h3>Recent Publications</h3>
<p>Management Series Report – Marrone Bio Innovations CEO Kevin Helash</p>
<p>Management Series Report – Westwater Resources Executive Chairman Terence Cryan and CAO Steven Cates</p>
<p>Initiation of Coverage – Westwater Resources, Inc.</p>
<h3>DISCLOSURES</h3>
<div></div>
<p>Water Tower Research (“WTR”) is a professional publisher of investment research reports on public companies and, to a lesser extent, private firms (“the Companies”). WTR provides investor-focused content and digital distribution strategies designed to help companies communicate with investors.<br><br>WTR is not a registered investment adviser or a broker/dealer nor does WTR provide investment banking services. WTR operates as an exempt investment adviser under the so called “publishers’ exemption” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940. WTR does not provide investment ratings / recommendations or price targets on the companies it reports on. Readers are advised that the research reports are published and provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities or the rendering of investment advice. The information provided in this report should not be construed in any manner whatsoever as personalized advice. All users and readers of WTR’s reports are cautioned to consult their own independent financial, tax and legal advisors prior to purchasing or selling securities.<br><br>Dmitry Silversteyn, who is the writer of this report, covers the Chemicals &amp; Materials Technology and BioEconomy sectors for WTR. Mr. Silversteyn and members of his household have no personal or business-related relationship to the subject company other than providing digital content and any ancillary services WTR may offer.<br><br>Unless otherwise indicated, WTR intends to provide continuing coverage of the covered companies. WTR will notify its readers through website postings or other appropriate means if WTR determines to terminate coverage of any of the companies covered.<br><br>In certain instances, including this report, WTR will write research covering non-clients. Readers should assume that WTR may seek to turn these non-paying companies into paying clients. Likewise, WTR may seek to transform these non-clients into paying clients of it or of its affiliate, which provides services such as presenting at sponsored investor conferences, distributing press releases, advising on investor relations and broader corporate communications and public relations strategies as well as performing certain other related services (“Ancillary Services”). The companies that WTR covers in our research are not required to purchase or use Ancillary Services of WTR or an affiliate might offer to clients.<br><br>The manner of WTR’s potential research compensation and Ancillary Services to covered companies raise actual and perceived conflicts of interest. WTR is committed to manage those conflicts to protect its reputation and the objectivity of employees/analysts by adhering to strictly written compliance guidelines.<br><br>The views and analyses included in our research reports are based on current public information that we consider to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, timeliness, or correctness. Neither we nor our analysts, directors, officers, employees, representatives, independent contractors or agents shall be liable for any omissions, errors or inaccuracies, regardless of cause, foreseeability or the lack of timeliness of, or any delay or interruptions in the transmission of our reports to content users. This lack of liability extends to direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, losses, lost income, lost profit or opportunity costs.<br><br>All investment information contained herein should be independently verified by the reader or user of this report. For additional information, all readers of this report are encouraged to visit WTR’s website www.watertowerresearch.com.</p>

KEY HIGHLIGHTS


WTR-CMI last week.&nbsp;In what was another positive week for the stock market, both the Russell 2000 and S&amp;P 500 appreciated 4.3% versus week-ago levels, while our WTR-CMI index of 30 chemicals and materials technology stocks outperformed the broader market with a 4.9% return. Lithium stocks once again led our index higher, as PLL, LAC, and ALB benefited from improved investor sentiment on lithium demand and, more importantly, pricing by appreciating 21.1%, 12.3% and 10.3%, respectively. LTHM, while not quite keeping up the pace with an 8.9% improvement,&nbsp;signed a long-term lithium hydroxide supply agreement with GM, which also signed a&nbsp;long-term supply deal with South Korean LG Chem for battery cathodes. At the other end of the performance spectrum, SHW disappointed investors with its 2H22 guidance and saw its stock decline 6.6% for the week, with ASH’s 4.1% decline following an earnings beat and raise bounce the prior week and AXTA posting a 3.3% decline as its 2Q22 earrings and guidance left investors unimpressed, while the&nbsp;CEO transition, which the company announced at the same time, may also have contributed to shareholder unease.
Ford touts sufficient materials for EV push.&nbsp;Like many auto OEMs, Ford is not leaving the fate of its EV transition in the hands of Tier-I suppliers and instead is signing supply agreements directly with critical materials suppliers. The company recently&nbsp;announced sufficient lithium and nickel supply contracts&nbsp;to support its projected EV production into 2026.
China’s July new car sales continue to rebound.&nbsp;China Automobile Dealers Association expects the country’s new car sales&nbsp;to follow June’s trend of Y/Y improvement with an 18% Y/Y increase in July, as COVID lockdown restrictions continue to ease and the government’s incentives for gasoline powered vehicles kick in. NEV vehicle growth is expected to top 100% Y/Y as well.
MTRN commissions commercial plant.&nbsp;Materion and Kairos Power have&nbsp;jointly commissioned a Molten Salt Purification Plant (MSPP)&nbsp;for the production of beryllium fluoride and lithium fluoride for use as heat transfer fluid for the Kairos’ next generation Fluoride Salt-Cooled High-Temperature Reactor (KP-FHR) nuclear reactors.

WTR-CMI WEEKLY PERFORMANCE

Ag-Tech and Bio-Ag
Fertilizer availability (and price) remains a concern heading into 2023.&nbsp;Although fertilizer prices have come off the recent highs,&nbsp;they remain at multi-year high levels heading into the 2023 season. And it doesn’t look like prices will get much lower prior to the time farmers may want to think about locking in at least some supply at prevailing prices. Concerns remain regarding European production, particularly for nitrogen fertilizers (ammonia and urea) due to reductions in Russian-supplied natural gas and the resulting impact on both volume of fertilizer production and the cost of fertilizers in Europe. Adding further concerns is the possibility that China, which is a large producer and exporter of fertilizers, may reduce its exports due to high energy costs and increased domestic demand. Therefore, while US farmers may continue to struggle to secure sufficient supply of chemical fertilizers at acceptable prices next year yet again, the situation may also provide opportunities for American-based companies, such as CF Industries (NYSE: CF), to increase their market share and maintain elevated prices that should contribute to stronger margins. It may also create an opportunity for bio-based fertilizer companies to expand their market share.
Automotive &amp; Transportation
High natural gas prices and uncertain availability to affect German production.&nbsp;As Russia continues to play games with natural gas supplies to Europe, the region’s governments are asking their industries to work to reduce the use of natural gas for the time being.&nbsp;The German automotive industry is not an exception, and while steps to reduce gas use have been or are being take, the industry warns that they are temporary and further reductions would require easing of emission regulations and even then, may affect output. This may suggest continuing struggles for the European automotive market to regain its stride after two years of downward volatility. Meanwhile, commercial vehicle registrations in Europe&nbsp;continued to decline, posting a 22.5% drop Y/Y in June, with first half of the year registrations down 20.3% Y/Y.
Toyota struggles with production in Japan.&nbsp;The company had to&nbsp;suspend night shift production&nbsp;at one of its plants in Japan on re-emerging COVID concerns and continues to see domestic production decline as a result of supply chain disruptions and COVID protocols. The company has been able to&nbsp;offset reduced domestic production with higher output from its global network outside Japan, with foreign plant output growing 5.6% Y/Y through June, helping to offset an 18% plunge in Japanese plants’ output. Still, for the first six months of 2022, Toyota saw its total global output decline almost 4% Y/Y.
With car builds still down in most geographies Y/Y and likely to finish 2022 below 2021 levels, companies in our index with significant exposure to the automotive and transportation markets may continue to struggle with top-line growth despite higher prices, as sluggish volumes and negative FX headwind combined with still elevated raw material costs offset internal cost savings efforts and pricing initiatives leading to top-line and margin performance that may disappoint versus current forecasts. We therefore remain cautious on PPG and AXTA and, to a lesser extent, on HXL, AVNT, and FUL.
Rating and Price Target Changes
ALB –&nbsp;RBC raised its price target (PT) to $331 from $324 and reiterated its Outperform rating.
ASH –&nbsp;UBS raised its PT to $131 from $127 and reiterated its Buy rating; Wells Fargo also raised its PT to $110 from $107 and maintained its Equal Weight rating; BMO likewise raised its PT to $135 from $129 and reiterated its Outperform rating.
AVNT –&nbsp;Baird lowered its PT to $56 from $63 and reiterated its Outperform rating; Stifel also lowered its PT to $70 from $76 and reiterated its Buy recommendation; Morgan Stanley lowered its PT to $50 from $63 and maintained its Equal Weight recommendation.
AXTA –&nbsp;KeyBank raised its PT to $31 from $30 and reiterated its Overweight rating; JP Morgan lowered its PT to $32 from $35, while reiterating its Overweight rating; Wells Fargo raised its PT to $26 from $25 and maintained its Equal Weight rating; Baird lowered its PT to $53 from $38 and reiterated its Outperform rating.
CTVA –&nbsp;Mizuho Securities raised its PT to $68 from $67 and reiterated its Buy recommendation.
ECL –&nbsp;Deutsche Bank lowered its PT to $180 from $195 and reiterated its Buy rating; BMO lowered its PT to $172 from $181 and maintained its Market Perform rating; Mizuho Securities lowered its PT to $178 from $183 and maintained its Neutral rating; Baird lowered its PT to $171 from $193 and reiterated its Outperform rating; UBS lowered its PT to $198 from $205 and reiterated its Buy recommendation.
EMN –&nbsp;UBS lowered its PT to $118 from $121 and reiterated its Buy recommendation.
FMC –&nbsp;RBC lowered its PT to $139 from $152 and reiterated its Outperform rating; Mizuho Securities lowered its PT to $149 from $155 and reiterated its Buy recommendation.
HXL –&nbsp;Vertical Research raised its PT to $60 from $58 and reiterated its Buy rating; Morgan Stanley raised its PT to $59 from $57 and reiterated its Underweight recommendation.
PPG –&nbsp;Deutsche Bank lowered its PT to $150 from $15 and reiterated its Buy rating; Wells Fargo raised its PT to $135 from $126 and maintained its Equal Weight rating; Mizuho Securities raised its PT to $163 from $162 and reiterated its Buy rating.
RPM –&nbsp;UBS raised its PT to $99 from $96 and reiterated its Buy rating; RBC raised its PT to $89 from $86 and maintained its Sector Perform rating.
SHW –&nbsp;KeyBank lowered its PT to $290 from $335 and reiterated its Overweight rating; Deutsche Bank lowered its PT to $275 from $315 and reiterated its Buy rating; BMO lowered its PT to $251 from $274 and maintained its Market Perform rating; Wells Fargo lowered its PT to $250 from $274 and maintained its Equal Weight rating; JP Morgan lowered its PT to $275 from $300 and reiterated its Overweight rating; Morgan Stanley lowered its PT to $300 from $330 and reiterated its Overweight rating; Credit Suisse lowered its PT to $225 from $245 and reiterated its Underperform rating; UBS lowered its PT to $257 from $265 and maintained its Neutral rating; Vertical Research raised its PT to $252 from $241 and maintained its Hold rating; Berenberg Bank lowered its PT to $250 from $285 and maintained its Hold rating; RBC lowered its PT to 300 from $312 and reiterated its Outperform rating.
Recent WTR Publications and Upcoming Events
Upcoming
Fireside Chat with Management of Westwater Resources, Inc. (NYSE: WWR) – August 4 at 11:00 am EDT
Recent Publications
Management Series Report – Marrone Bio Innovations CEO Kevin Helash
Management Series Report – Westwater Resources Executive Chairman Terence Cryan and CAO Steven Cates
Initiation of Coverage – Westwater Resources, Inc.
DISCLOSURES

Water Tower Research (“WTR”) is a professional publisher of investment research reports on public companies and, to a lesser extent, private firms (“the Companies”). WTR provides investor-focused content and digital distribution strategies designed to help companies communicate with investors.  WTR is not a registered investment adviser or a broker/dealer nor does WTR provide investment banking services. WTR operates as an exempt investment adviser under the so called “publishers’ exemption” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940. WTR does not provide investment ratings / recommendations or price targets on the companies it reports on. Readers are advised that the research reports are published and provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities or the rendering of investment advice. The information provided in this report should not be construed in any manner whatsoever as personalized advice. All users and readers of WTR’s reports are cautioned to consult their own independent financial, tax and legal advisors prior to purchasing or selling securities.  Dmitry Silversteyn, who is the writer of this report, covers the Chemicals &amp; Materials Technology and BioEconomy sectors for WTR. Mr. Silversteyn and members of his household have no personal or business-related relationship to the subject company other than providing digital content and any ancillary services WTR may offer.  Unless otherwise indicated, WTR intends to provide continuing coverage of the covered companies. WTR will notify its readers through website postings or other appropriate means if WTR determines to terminate coverage of any of the companies covered.  In certain instances, including this report, WTR will write research covering non-clients. Readers should assume that WTR may seek to turn these non-paying companies into paying clients. Likewise, WTR may seek to transform these non-clients into paying clients of it or of its affiliate, which provides services such as presenting at sponsored investor conferences, distributing press releases, advising on investor relations and broader corporate communications and public relations strategies as well as performing certain other related services (“Ancillary Services”). The companies that WTR covers in our research are not required to purchase or use Ancillary Services of WTR or an affiliate might offer to clients.  The manner of WTR’s potential research compensation and Ancillary Services to covered companies raise actual and perceived conflicts of interest. WTR is committed to manage those conflicts to protect its reputation and the objectivity of employees/analysts by adhering to strictly written compliance guidelines.  The views and analyses included in our research reports are based on current public information that we consider to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, timeliness, or correctness. Neither we nor our analysts, directors, officers, employees, representatives, independent contractors or agents shall be liable for any omissions, errors or inaccuracies, regardless of cause, foreseeability or the lack of timeliness of, or any delay or interruptions in the transmission of our reports to content users. This lack of liability extends to direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, losses, lost income, lost profit or opportunity costs.  All investment information contained herein should be independently verified by the reader or user of this report. For additional information, all readers of this report are encouraged to visit WTR’s website www.watertowerresearch.com.

Mat-Chem Notes for the Week Ended July 31, 2022

<h2>KEY HIGHLIGHTS</h2>
<div></div>
<ul>
<li>WTR-CMI last week.&nbsp;In what was another down week for the market, with the Russell 2000 declining 1.1% and the S&amp;P 500 dropping a whopping 3.0%, our WTR-CMI index of 30 chemicals and materials technology companies bucked the trend and posted a 1.0% appreciation. YTD, our index, while down 9.8%, is materially outperforming the broader market, as the Russell 2000 has declined 21%, while the S&amp;P 500 has lost 18.1% of its value since the beginning of 2022.</li>
<li>Winners and losers.&nbsp;Lithium stocks’ recovery led the performance last week, with PLL (up 10.9%), LAC (up 7.8%), and LTHM (up 7.4%) leading the way. Conversely, KWR, SHW, and PKE suffered the biggest declines, dropping 5.5%, 5.4%, and 5.0%, respectively, being the only stocks in our index to underperform the S&amp;P 500.</li>
<li>Addressing biologics’ growing needs.&nbsp;Taking a break from boardroom fights, AVD announced the development (with 3Bar Biologics) of&nbsp;non-reusable packaging&nbsp;for liquid biologic crop protection products, as bio-based crop inputs are incompatible with reusable packaging typically used in these applications due to the threat of contamination and the need for sterility when dealing with live organisms.</li>
<li>April was the worst month of the year…so far.&nbsp;The European new car market saw another negative Y/Y comp, with&nbsp;new car registrations declining almost 21%&nbsp;compared with April of 2021, the steepest Y/Y drop this year. Unfortunately, as the&nbsp;Bloomberg chart shows, May and June results may not be much better and hopes may begin to fade for a 2H22 recovery, given the general economic slowdown taking place globally and the still unresolved supply chain and logistics issues. In our sector, PPG, AXTA, and to a lesser extent, FUL, AVNT, KWR, and HXL have the greatest exposure to the automotive and transportation industry, suggesting volume growth will be hard to come by for these companies in 2022.</li>
<li>Plantings accelerate in US, but concerns remain.&nbsp;Better weather conditions allowed US farmers to get out into the field and attempt to catch up on getting seeds into the ground. Corn and soybean&nbsp;plantings increased significantly last week, but remain below five-year averages, with planting window rapidly closing over the&nbsp;next two to three weeks.</li>
</ul>
<h2>WTR-CMI WEEKLY PERFORMANCE</h2>
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<p>Source: YCharts; May 20 close</p>
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<h2>Lithium &amp; EV Ecosystem</h2>
<p>Auto manufacturers continue to look for an edge in EV race.&nbsp;Two German automakers made announcements last week of partnerships with companies employing new technologies to enable a more rapid transition to<br>battery-powered vehicles.&nbsp;Mercedes Benz announced the addition of a new battery technology&nbsp;in cooperation with Sila Nanotechnologies, which utilizes higher silicon content anodes for lithium batteries. The newer anodes allow for greater energy density by 20-40% and therefore expanded battery range, addressing one of the main consumer concerns. The two companies hope to have the battery as an option for high-end and heavier SUV vehicles by the middle of this decade. Meanwhile,&nbsp;BMW joined Mangrove Lithium&nbsp;(privately held Canadian company) as the lead investor. Mangrove Lithium has developed a process to transform virgin and recycled raw lithium into battery-grade material that does not require a separate carbonate plant to convert lithium raw material into battery-grade lithium carbonate. While still in the pilot plant stage, the junior lithium converter hopes to use the recently raised capital to accelerate the construction of its first commercial production plant. No timetable was provided.</p>
<p>Expanding EV ecosystem.&nbsp;Swedish start-up&nbsp;Northvolt has started commercial deliveries of its battery cells&nbsp;to a car manufacturer in Europe. While the identity of the car manufacturer was not revealed, Northvolt’s customers (companies that signed supply agreements with the lithium cell producer) include BMW, Volkswagen, Volvo Cars, and Polestar. Here in the US,&nbsp;ACE Green Recycling&nbsp;announced plans to build and operate North America’s largest sustainable battery recycling park in Texas. The proposed plant will be able to recycle both traditional lead-acid batteries, as well as lithium batteries, using a more environmentally sustainable process that can also produce higher battery material yields.</p>
<p>As if higher metal prices and looming material shortage weren’t enough.&nbsp;The new government in Chile, the world’s second-largest producer of lithium, has pledged to establish a&nbsp;state lithium firm&nbsp;to develop the ultra-light battery metal and hopes to establish a model for the company by the end of the year, effectively setting up a government-run competitor to SQM and ALB, who are currently developing and mining lithium for the global EV market in the country. Meanwhile, current lithium operators in the country are facing a new challenge, or rather a new chapter in an old challenge – environmental activism. The issue at hand is the pink flamingo population, which a&nbsp;recent study&nbsp;suggested was declining, partly as a result of excessive water use by lithium miners operating in the country, which is putting a strain on flamingo habitats. While the merit of the study and its conclusions can be debated, environmental groups have seized on the report to limit future mining activities in the country. Unfortunately, Chile is not unique – domestically, both PLL and LAC, who are trying to commercialize both lithium mining and battery material processing facilities in North Carolina and Nevada, respectively, are facing similar obstacles in getting regulatory and environmental permits necessary to commence development and construction of these projects, as environmental groups and those representing indigenous populations are actively lobbying and in some cases suing in an attempt to hinder the development of domestic supply of the materials critical to the ongoing transformation of the automotive and transportation industries. We believe these trends will continue, highlighting the underlying issues with automotive electrification – key materials to enable the transition are mined or, in the case of graphite for battery anodes, still rely on petrochemical feedstocks, which means their environmental impact must be considered and accounted for. We believe blocking domestic development of resources critical to the industry’s needs will do little to accelerate the rate of EV adoption by consumers, while keeping domestic markets hostage to Chinese sources, or reliant on materials produced in other parts of the world that may not be as environmentally responsible as domestic manufacture would be.</p>
<h2>Ag-Chem and Ag-Tech</h2>
<p>Food security is a real concern.&nbsp;In the latest sign of growing global food security concerns, India, the second-largest wheat grower in the world,&nbsp;has mostly prohibited exports, saying that the nation’s food security is under threat. Hot weather in wheat-producing regions of the country has already affected expected harvest yields, causing the government to lower its production outlook for the season by 5.7% to 105 million metric tons for the crop year ending in June. Meanwhile,&nbsp;grain exports from Ukraine&nbsp;are down 64% so far in May compared with last year at this time, as a result of Russia’s invasion of the country and disruptions to shipping as well as planting. Russia’s blockade of Ukrainian Black Sea ports has stranded approximately&nbsp;20 million tons of grain in the country’s warehouses, keeping the critical supplies from the global market and countries that rely on Ukrainian wheat for their food security. Ukraine accounted for 10% of global wheat exports in 2021.</p>
<p>Late plantings raise weed concerns, which may be a positive for herbicide producers.&nbsp;One consequence of late plantings and therefore late sprouting of row crops this year is the disadvantage it puts these sprouting crops versus faster growing,&nbsp;more aggressive grasses and weeds&nbsp;that compete with sowed grain for nutrients and water. As a result, greater use of herbicides (assuming farmers can get them, given the shortages and higher prices we discussed in previous publications) may be required, which may be seen as a positive for herbicide producers, such as CTVA, BASF, Bayer, AVD, and to a lesser extent, FMC (due to that company’s higher proportion of insecticide sales). It may also benefit emerging biobased ag input companies, such as BIOX and MBII, who sell products that help crops utilize the nutrients in the soil, as well as condition the soil itself to be less hospitable to pests.</p>
<h2>Recent WTR Publications</h2>
<p>Bio-ag market update and Marrone Bio Innovations-Bioceres Merger</p>
<p>Marrone Bio Innovations 1Q22 Results</p>
<p>Fireside Chat: Kevin R. Helash, Chief Executive Officer and Director of Marrone Bio Innovations</p>
<h2>Rating and Price Target Changes</h2>
<p>EAF –&nbsp;GLJ Research lowered its price target (PT) to $4.93 from $6.72 and reiterated its Sell recommendation.</p>
<p>ECL –&nbsp;Credit Suisse initiated coverage of the stock with a Neutral rating and $180 PT.</p>
<p>KWR –&nbsp;Deutsche Bank lowered its PT to $175 from $225 and reiterated its Buy rating.</p>
<p>LTHM –&nbsp;Deutsche Bank initiated coverage of the stock with a Hold rating and $29 PT.</p>
<p>PPG –&nbsp;Berenberg Bank downgraded the stock to Hold from Buy and lowered its PT to $140 from $180.</p>
<p>SHW –&nbsp;Berenberg Bank lowered its PT to $285 from $310 and maintained its Hold recommendation.</p>
<h3>DISCLOSURES</h3>
<div></div>
<p>Water Tower Research (“WTR”) is a professional publisher of investment research reports on public companies and, to a lesser extent, private firms (“the Companies”). WTR provides investor-focused content and digital distribution strategies designed to help companies communicate with investors.<br><br>WTR is not a registered investment adviser or a broker/dealer nor does WTR provide investment banking services. WTR operates as an exempt investment adviser under the so called “publishers’ exemption” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940. WTR does not provide investment ratings / recommendations or price targets on the companies it reports on. Readers are advised that the research reports are published and provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities or the rendering of investment advice. The information provided in this report should not be construed in any manner whatsoever as personalized advice. All users and readers of WTR’s reports are cautioned to consult their own independent financial, tax and legal advisors prior to purchasing or selling securities.<br><br>Dmitry Silversteyn, who is the writer of this report, covers the Chemicals &amp; Materials Technology and BioEconomy sectors for WTR. Mr. Silversteyn and members of his household have no personal or business-related relationship to the subject company other than providing digital content and any ancillary services WTR may offer.<br><br>Unless otherwise indicated, WTR intends to provide continuing coverage of the covered companies. WTR will notify its readers through website postings or other appropriate means if WTR determines to terminate coverage of any of the companies covered.<br><br>In certain instances, including this report, WTR will write research covering non-clients. Readers should assume that WTR may seek to turn these non-paying companies into paying clients. Likewise, WTR may seek to transform these non-clients into paying clients of it or of its affiliate, which provides services such as presenting at sponsored investor conferences, distributing press releases, advising on investor relations and broader corporate communications and public relations strategies as well as performing certain other related services (“Ancillary Services”). The companies that WTR covers in our research are not required to purchase or use Ancillary Services of WTR or an affiliate might offer to clients.<br><br>The manner of WTR’s potential research compensation and Ancillary Services to covered companies raise actual and perceived conflicts of interest. WTR is committed to manage those conflicts to protect its reputation and the objectivity of employees/analysts by adhering to strictly written compliance guidelines.<br><br>The views and analyses included in our research reports are based on current public information that we consider to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, timeliness, or correctness. Neither we nor our analysts, directors, officers, employees, representatives, independent contractors or agents shall be liable for any omissions, errors or inaccuracies, regardless of cause, foreseeability or the lack of timeliness of, or any delay or interruptions in the transmission of our reports to content users. This lack of liability extends to direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, losses, lost income, lost profit or opportunity costs.<br><br>All investment information contained herein should be independently verified by the reader or user of this report. For additional information, all readers of this report are encouraged to visit WTR’s website www.watertowerresearch.com.</p>
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KEY HIGHLIGHTS


WTR-CMI last week.&nbsp;In what was another down week for the market, with the Russell 2000 declining 1.1% and the S&amp;P 500 dropping a whopping 3.0%, our WTR-CMI index of 30 chemicals and materials technology companies bucked the trend and posted a 1.0% appreciation. YTD, our index, while down 9.8%, is materially outperforming the broader market, as the Russell 2000 has declined 21%, while the S&amp;P 500 has lost 18.1% of its value since the beginning of 2022.
Winners and losers.&nbsp;Lithium stocks’ recovery led the performance last week, with PLL (up 10.9%), LAC (up 7.8%), and LTHM (up 7.4%) leading the way. Conversely, KWR, SHW, and PKE suffered the biggest declines, dropping 5.5%, 5.4%, and 5.0%, respectively, being the only stocks in our index to underperform the S&amp;P 500.
Addressing biologics’ growing needs.&nbsp;Taking a break from boardroom fights, AVD announced the development (with 3Bar Biologics) of&nbsp;non-reusable packaging&nbsp;for liquid biologic crop protection products, as bio-based crop inputs are incompatible with reusable packaging typically used in these applications due to the threat of contamination and the need for sterility when dealing with live organisms.
April was the worst month of the year…so far.&nbsp;The European new car market saw another negative Y/Y comp, with&nbsp;new car registrations declining almost 21%&nbsp;compared with April of 2021, the steepest Y/Y drop this year. Unfortunately, as the&nbsp;Bloomberg chart shows, May and June results may not be much better and hopes may begin to fade for a 2H22 recovery, given the general economic slowdown taking place globally and the still unresolved supply chain and logistics issues. In our sector, PPG, AXTA, and to a lesser extent, FUL, AVNT, KWR, and HXL have the greatest exposure to the automotive and transportation industry, suggesting volume growth will be hard to come by for these companies in 2022.
Plantings accelerate in US, but concerns remain.&nbsp;Better weather conditions allowed US farmers to get out into the field and attempt to catch up on getting seeds into the ground. Corn and soybean&nbsp;plantings increased significantly last week, but remain below five-year averages, with planting window rapidly closing over the&nbsp;next two to three weeks.

WTR-CMI WEEKLY PERFORMANCE

Source: YCharts; May 20 close







Lithium &amp; EV Ecosystem
Auto manufacturers continue to look for an edge in EV race.&nbsp;Two German automakers made announcements last week of partnerships with companies employing new technologies to enable a more rapid transition to battery-powered vehicles.&nbsp;Mercedes Benz announced the addition of a new battery technology&nbsp;in cooperation with Sila Nanotechnologies, which utilizes higher silicon content anodes for lithium batteries. The newer anodes allow for greater energy density by 20-40% and therefore expanded battery range, addressing one of the main consumer concerns. The two companies hope to have the battery as an option for high-end and heavier SUV vehicles by the middle of this decade. Meanwhile,&nbsp;BMW joined Mangrove Lithium&nbsp;(privately held Canadian company) as the lead investor. Mangrove Lithium has developed a process to transform virgin and recycled raw lithium into battery-grade material that does not require a separate carbonate plant to convert lithium raw material into battery-grade lithium carbonate. While still in the pilot plant stage, the junior lithium converter hopes to use the recently raised capital to accelerate the construction of its first commercial production plant. No timetable was provided.
Expanding EV ecosystem.&nbsp;Swedish start-up&nbsp;Northvolt has started commercial deliveries of its battery cells&nbsp;to a car manufacturer in Europe. While the identity of the car manufacturer was not revealed, Northvolt’s customers (companies that signed supply agreements with the lithium cell producer) include BMW, Volkswagen, Volvo Cars, and Polestar. Here in the US,&nbsp;ACE Green Recycling&nbsp;announced plans to build and operate North America’s largest sustainable battery recycling park in Texas. The proposed plant will be able to recycle both traditional lead-acid batteries, as well as lithium batteries, using a more environmentally sustainable process that can also produce higher battery material yields.
As if higher metal prices and looming material shortage weren’t enough.&nbsp;The new government in Chile, the world’s second-largest producer of lithium, has pledged to establish a&nbsp;state lithium firm&nbsp;to develop the ultra-light battery metal and hopes to establish a model for the company by the end of the year, effectively setting up a government-run competitor to SQM and ALB, who are currently developing and mining lithium for the global EV market in the country. Meanwhile, current lithium operators in the country are facing a new challenge, or rather a new chapter in an old challenge – environmental activism. The issue at hand is the pink flamingo population, which a&nbsp;recent study&nbsp;suggested was declining, partly as a result of excessive water use by lithium miners operating in the country, which is putting a strain on flamingo habitats. While the merit of the study and its conclusions can be debated, environmental groups have seized on the report to limit future mining activities in the country. Unfortunately, Chile is not unique – domestically, both PLL and LAC, who are trying to commercialize both lithium mining and battery material processing facilities in North Carolina and Nevada, respectively, are facing similar obstacles in getting regulatory and environmental permits necessary to commence development and construction of these projects, as environmental groups and those representing indigenous populations are actively lobbying and in some cases suing in an attempt to hinder the development of domestic supply of the materials critical to the ongoing transformation of the automotive and transportation industries. We believe these trends will continue, highlighting the underlying issues with automotive electrification – key materials to enable the transition are mined or, in the case of graphite for battery anodes, still rely on petrochemical feedstocks, which means their environmental impact must be considered and accounted for. We believe blocking domestic development of resources critical to the industry’s needs will do little to accelerate the rate of EV adoption by consumers, while keeping domestic markets hostage to Chinese sources, or reliant on materials produced in other parts of the world that may not be as environmentally responsible as domestic manufacture would be.
Ag-Chem and Ag-Tech
Food security is a real concern.&nbsp;In the latest sign of growing global food security concerns, India, the second-largest wheat grower in the world,&nbsp;has mostly prohibited exports, saying that the nation’s food security is under threat. Hot weather in wheat-producing regions of the country has already affected expected harvest yields, causing the government to lower its production outlook for the season by 5.7% to 105 million metric tons for the crop year ending in June. Meanwhile,&nbsp;grain exports from Ukraine&nbsp;are down 64% so far in May compared with last year at this time, as a result of Russia’s invasion of the country and disruptions to shipping as well as planting. Russia’s blockade of Ukrainian Black Sea ports has stranded approximately&nbsp;20 million tons of grain in the country’s warehouses, keeping the critical supplies from the global market and countries that rely on Ukrainian wheat for their food security. Ukraine accounted for 10% of global wheat exports in 2021.
Late plantings raise weed concerns, which may be a positive for herbicide producers.&nbsp;One consequence of late plantings and therefore late sprouting of row crops this year is the disadvantage it puts these sprouting crops versus faster growing,&nbsp;more aggressive grasses and weeds&nbsp;that compete with sowed grain for nutrients and water. As a result, greater use of herbicides (assuming farmers can get them, given the shortages and higher prices we discussed in previous publications) may be required, which may be seen as a positive for herbicide producers, such as CTVA, BASF, Bayer, AVD, and to a lesser extent, FMC (due to that company’s higher proportion of insecticide sales). It may also benefit emerging biobased ag input companies, such as BIOX and MBII, who sell products that help crops utilize the nutrients in the soil, as well as condition the soil itself to be less hospitable to pests.
Recent WTR Publications
Bio-ag market update and Marrone Bio Innovations-Bioceres Merger
Marrone Bio Innovations 1Q22 Results
Fireside Chat: Kevin R. Helash, Chief Executive Officer and Director of Marrone Bio Innovations
Rating and Price Target Changes
EAF –&nbsp;GLJ Research lowered its price target (PT) to $4.93 from $6.72 and reiterated its Sell recommendation.
ECL –&nbsp;Credit Suisse initiated coverage of the stock with a Neutral rating and $180 PT.
KWR –&nbsp;Deutsche Bank lowered its PT to $175 from $225 and reiterated its Buy rating.
LTHM –&nbsp;Deutsche Bank initiated coverage of the stock with a Hold rating and $29 PT.
PPG –&nbsp;Berenberg Bank downgraded the stock to Hold from Buy and lowered its PT to $140 from $180.
SHW –&nbsp;Berenberg Bank lowered its PT to $285 from $310 and maintained its Hold recommendation.
DISCLOSURES

Water Tower Research (“WTR”) is a professional publisher of investment research reports on public companies and, to a lesser extent, private firms (“the Companies”). WTR provides investor-focused content and digital distribution strategies designed to help companies communicate with investors.  WTR is not a registered investment adviser or a broker/dealer nor does WTR provide investment banking services. WTR operates as an exempt investment adviser under the so called “publishers’ exemption” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940. WTR does not provide investment ratings / recommendations or price targets on the companies it reports on. Readers are advised that the research reports are published and provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities or the rendering of investment advice. The information provided in this report should not be construed in any manner whatsoever as personalized advice. All users and readers of WTR’s reports are cautioned to consult their own independent financial, tax and legal advisors prior to purchasing or selling securities.  Dmitry Silversteyn, who is the writer of this report, covers the Chemicals &amp; Materials Technology and BioEconomy sectors for WTR. Mr. Silversteyn and members of his household have no personal or business-related relationship to the subject company other than providing digital content and any ancillary services WTR may offer.  Unless otherwise indicated, WTR intends to provide continuing coverage of the covered companies. WTR will notify its readers through website postings or other appropriate means if WTR determines to terminate coverage of any of the companies covered.  In certain instances, including this report, WTR will write research covering non-clients. Readers should assume that WTR may seek to turn these non-paying companies into paying clients. Likewise, WTR may seek to transform these non-clients into paying clients of it or of its affiliate, which provides services such as presenting at sponsored investor conferences, distributing press releases, advising on investor relations and broader corporate communications and public relations strategies as well as performing certain other related services (“Ancillary Services”). The companies that WTR covers in our research are not required to purchase or use Ancillary Services of WTR or an affiliate might offer to clients.  The manner of WTR’s potential research compensation and Ancillary Services to covered companies raise actual and perceived conflicts of interest. WTR is committed to manage those conflicts to protect its reputation and the objectivity of employees/analysts by adhering to strictly written compliance guidelines.  The views and analyses included in our research reports are based on current public information that we consider to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, timeliness, or correctness. Neither we nor our analysts, directors, officers, employees, representatives, independent contractors or agents shall be liable for any omissions, errors or inaccuracies, regardless of cause, foreseeability or the lack of timeliness of, or any delay or interruptions in the transmission of our reports to content users. This lack of liability extends to direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, losses, lost income, lost profit or opportunity costs.  All investment information contained herein should be independently verified by the reader or user of this report. For additional information, all readers of this report are encouraged to visit WTR’s website www.watertowerresearch.com.








Mat-Chem Notes for the Week Ended May 22, 2022

United States

Ingevity Corporation manufactures specialty chemicals. The Company offers adhesives, inks, soaps, detergents, agricultural chemicals, metalworking fluids, and lubricants. Ingevity markets its products worldwide.

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Ingevity Corp (NGVT US)

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