J.P. Morgan analyst Jeffrey Zekauskas upgraded the rating on Compass Minerals International (CMP – Research Report) to a Buy today, setting a price target of $15.00.
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Jeffrey Zekauskas has given his Buy rating due to a combination of factors that reflect a potential turnaround for Compass Minerals International. Despite challenges such as a significant dividend reduction and a complete exit from the lithium market, the company appears to be positioned for improved performance. The core business of salt production for road management has been hindered by warm winters, but recent colder weather trends suggest a potential uplift in earnings.
Additionally, Compass Minerals is working on reducing its inventory, which may enhance cash flow and lead to a positive free cash flow in 2025. The company’s financial leverage is notable, but it is anticipated that working down inventories will support cash flow improvements. The valuation metrics for Compass suggest a favorable opportunity, with trading multiples below historical averages and the potential for better weather conditions to positively impact operations. Consequently, the price target has been lifted, reflecting a positive outlook for the company’s financial performance in the coming years.