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KMG Chemicals downgraded at KeyBanc on valuation

Jun. 13, 2018 3:57 PM ETKMG Chemicals, Inc. (KMG) StockKMGBy: Carl Surran, SA News Editor
  • KMG Chemicals (KMG -0.9%) is downgraded to Sector Weight from Overweight at KeyBanc on valuation after shares have gained ~50% since last November.
  • KMG's FQ3 earnings beat and guidance raise sent the stock above KeyBanc's prior $75 price target and now trades at a fair valuation, the firm says, noting the company's multiple of 12x on estimated 2019 EV/EBITDA represents a premium to the average peer group's 10x multiple.
  • KeyBanc says KMG's strong stock performance since it initiated coverage in November is warranted, as the company succeeded in transforming to a "higher-quality chemical company," but the competitive landscape has intensified and the electronic chemicals business faces tougher Y/Y comparisons.

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