TLDR
- Shares of Solvay advanced 2.9% to €26.50 following Deutsche Bank’s upgrade from Sell to Hold
- Analyst Tristan Lamotte at Deutsche Bank increased the price target from €23.50 to €26
- The company’s rare earth operations could boost EBITDA by as much as €100 million, representing a 13% increase
- A non-binding agreement was signed with Viridis Mining to acquire rare earth materials from Brazilian operations
- Analysts continue to identify headwinds including possible guidance reductions, challenged soda ash pricing, and cash flow constraints
Shares of Solvay surged 2.9% to reach €26.50 on Thursday, propelled by Deutsche Bank’s rating revision and heightened market attention to the company’s rare earth mineral operations.
Tristan Lamotte, an analyst at Deutsche Bank, elevated his assessment of the Belgian specialty chemicals company from Sell to Hold, while simultaneously boosting the price objective from €23.50 to €26. This revision followed a period where Solvay’s shares trailed the SX4P European chemicals benchmark by 10% following the firm’s November 2025 downgrade, positioning the valuation at a more reasonable threshold.
The shares are currently valued at 7.5 times the 2026 projected EV/EBITDA multiple. While this represents a premium compared to industry competitors, Deutsche Bank now believes the valuation is warranted due to the rare earth opportunity.
According to Deutsche Bank’s analysis, the market has failed to properly value Solvay’s rare earth processing operations. Analysts project these operations could initially contribute approximately €100 million to EBITDA, representing a 13% enhancement. Should a rare earth initiative prove successful, the stock could experience further appreciation.
Brazilian Partnership Strengthens Rare Earth Strategy
Earlier in the month, Solvay entered into a preliminary agreement with Viridis Mining and Minerals to obtain rare earth raw materials from Brazilian sources. These materials would supply Solvay’s separation facility in La Rochelle, France, with full-scale commercial operations anticipated by 2028.
“This proposed transaction would mark a milestone in strengthening and diversifying our upstream supply chain,” said An Nuyttens, President of Solvay’s Special Chem business.
The company has established an objective to capture 30% of Europe’s magnet-grade light and heavy rare earth market by the end of the decade. The partnership with Viridis represents a strategic move to develop sourcing channels independent of Chinese suppliers.
Risks Remain Despite Upgrade
While Deutsche Bank has improved its stance, the firm stops short of recommending the stock as a buying opportunity. Multiple risk factors continue to impact the investment thesis.
Potential downward revisions to company guidance remain a concern. Soda ash market conditions continue to deteriorate. The construction sector shows persistent weakness. Additionally, free cash flow generation remains under pressure.
The rating enhancement reflects improved risk-reward dynamics following recent underperformance rather than a fundamental shift in the company’s core business trajectory.
Lamotte observed that while the SX4P index appreciated 10% during the period since November 2025’s downgrade, Solvay failed to keep pace. At the time of that previous rating cut, shares traded at €27.80 compared to the current €26.50 level.
Deutsche Bank’s revised €26 price objective remains marginally below current market prices, reinforcing the neutral stance on the investment.
The preliminary agreement with Viridis Mining lacks binding commitments, and commercial production at the La Rochelle facility remains approximately two years from commencement.
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