Make Hay While the Solstice Shines

Solstice Advanced Materials $SOLS ( ▼ 2.86% ) is starting to find its footing after being spun off from Honeywell $HON ( ▲ 0.12% ) in October.

RBC Capital Markets $RY ( ▼ 1.51% ) just upgraded the specialty chemicals company to Outperform.

Analyst Arun Viswanathan also raised his price target to $75 from $50, implying about 21.5% upside from Tuesday’s close.

RBC says the newly independent company is better positioned to grow faster than many of its peers.

RBC points to Solstice’s refrigerants business as a key growth engine.

The company has a strong position in HFO refrigerants, which are newer and more environmentally friendly than older alternatives. Viswanathan believes that advantage should support above-peer growth.

The analyst also highlighted Solstice’s monopoly-like role in uranium processing. Solstice is the only US company operating in a required step that converts uranium ore into UF6, a critical input for nuclear fuel.

Demand has increased in recent years due to improving nuclear fundamentals and sanctions on foreign producers.

RBC sees room for capacity growth in uranium conversion over time, as well as pricing tailwinds as multi-year contracts roll over.

Viswanathan also flagged cost discipline as an additional lever. He believes selling, general, and administrative expenses could eventually fall by about $50 million, supporting margins as the company scales.

For a young spinoff, RBC sees multiple ways for Solstice to create value.