Research from Water Tower Research, Water Tower Research

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.

Research from Water Tower Research

Equity Research Firm

Thematic (Sector/Industry)

Multiple Countries / Thematic (Sector/Industry)

<h3>KEY HIGHLIGHTS</h3>
<ul>
<li>WTR-CMI last week.&nbsp;In another solid week for the market, both indexes we monitor posted mid-single-digit improvements, with the Russell 2000 and the S&amp;P 500 increasing 4.6% and 5.9%, respectively. Our WTR-CMI index outperformed the market by delivering 7.6% W/W growth, led by KWR’s 23.5% bounce following solid 3Q results and AVNT’s 16.6% and ECL’s 15.5% improvements off post-3Q profit taking. Ag-chem companies saw their stocks consolidate during the week, with AVD and CTVA losing 4.7% and 0.7%, respectively, and FMC posting a modest 0.8% gain.</li>
<li>Ag-chem innovations continue.&nbsp;The last decade saw a sharp decline in regulatory approvals of new chemical active ingredients in the ag-inputs market. However, that does not mean that innovation of new ag-chem formulations has been absent, with FMC’s recent launch of a&nbsp;new fungicide formulation, which is a good example of continuing efforts to combat agricultural pests and increase crop yields with existing products.</li>
<li>Battery materials expansion efforts.&nbsp;CMP announced a&nbsp;multiyear supply agreement&nbsp;with LG Energy Solutions to supply the Korean battery manufacturer with lithium carbonate starting in 2025, when the first phase of CMP’s production plant is expected to come online. Meanwhile, NMG announced a completion of a&nbsp;financing round, during which it raised $50 million&nbsp;from three strategic investors, with the intention to use the funds to update its 2022 feasibility study for its phase 2 commercial integrated operation, including an open-pit graphite mine near Montreal and a battery material plant in Becancour, Quebec.</li>
<li>SHW expands in industrial coatings.&nbsp;The company announced&nbsp;the acquisition&nbsp;of German-based Specialized Industrial Coatings Holding (SIC Holding), which has annual sales of more than €91.5 million. The transaction is expected to close in early 2023.</li>
</ul>
<h3>WTR-CMI WEEKLY PERFORMANCE</h3>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/310/201/original/image_75503548321668650944643.png?1668650947" class="editor-image img-responsive" data-smartkarma-image-id="310201"></figure>
<div class="content-remarks">
<p>Source: Y-Charts as of November 11 close</p>
</div>
<h2>Ag-Tech and Bio-Ag</h2>
<p>Increasing importance of Brazilian ag market.&nbsp;The Brazilian agricultural industry&nbsp;continues to grow&nbsp;and increase its share of global grain markets. Driven by strong demand, the depreciating real (versus the US dollar), high commodity prices, and expanding farmland (one of the few geographies with increasing acreage under farming), Brazilian farmers are also benefiting from increased penetration of modern technology, including bio-based inputs, seeds, soil monitoring, and precision planting and spraying, which we believe will positively affect the growth of FMC, CTVA, BIOX, and BHIL, among others.</p>
<p>An alternative to farmland expansion.&nbsp;As arable land is in short supply in the US and other developed countries, making expansion by extension a difficult proposition, better land use appears to be one of the solutions to acreage growth. One such method is the use of&nbsp;Controlled Environment Agriculture&nbsp;(CEA). Indoor, hydroponic, and greenhouse growers are expanding their operations when it comes to specialty crops and increasing their market share and importance in the food supply chain as a result. While past its infancy stage, as the CEA industry is far from mature, offering plenty of opportunity for outsized growth both for its practitioners and for the companies supplying greenhouses, other related infrastructure, materials, equipment and services, investors may want to begin exploring.</p>
<h2>Automotive &amp; Transportation Markets</h2>
<p>October growth comes with a warning.&nbsp;While&nbsp;China’s new car sales&nbsp;increased 6.9% Y/Y in October, the pace was well off the mid-20s improvement seen in September. Furthermore,&nbsp;new energy vehicle (NEV) sales were flat M/M, although they remained above 600K units for a third straight month. Similarly, while&nbsp;the UK’s market&nbsp;also grew in October, up 26%, growth of EVs slowed within that period, up 23% Y/Y, possibly signaling that recent price increases passed on by EV OEMs to customers to help offset skyrocketing metal costs are having a dampening effect on demand. Overall, the UK’s automotive industry is expected to post its worst year since 1982 when it comes to automotive production. Then&nbsp;there is Russia, where new car registrations tumbled 63% in October, as the industry is feeling the impact of western sections both from a consumer-spending perspective, as well as from a lack of supply of foreign autos Russian consumers have come to prefer, as global OEMs are pulling their operations out and cutting ties with their JV partners in the country.</p>
<p>With Chinese sales remaining volatile, partially due to the government’s zero tolerance policies when it comes to COVID-19, European and North American sales under threat of&nbsp;a slowing economy and consumer sticker shock, not to mention semiconductor shortages that are expected to persist through 2023, recovery in auto OEM-related product demand, including coatings, adhesives, sealants, plastics, and composites, may be several quarters away, suggesting continued caution when it comes to companies in our index with high exposure to these markets, such as PPG and AXTA, but also AVNT, HXL, EAF, and FUL.</p>
<h2>Energy &amp; Battery Technology</h2>
<p>Battery metals growth accelerating, but bottlenecks are emerging.&nbsp;In 1H22, the growth and proliferation of new energy vehicles (NEVs, to use the Chinese term) accelerated globally, which has driven a sharp increase in&nbsp;critical battery metals growth. Lithium, as measured by lithium carbonate equivalents (LCE), grew to 117,200 mt in 1H22, up 76% Y/Y. Similarly, nickel volumes going into NEV batteries grew 50% Y/Y to 88,200 mt during this period and cobalt demand from NEV batteries increased 44% to 18,500 mt. With strong growth of EVs expected to continue, demand for battery metals should grow in tandem, even if at slightly lower rates due to continuing improvement in battery performance, as well as changing preferences when it comes to battery chemistries. Against this strong demand profile, one must juxtapose the realities of supply, which looks to be increasingly constrained when it comes to battery metals and therefore battery production overall. Even with the billions of dollars and euros made available by the US and EU governments recently in the form of targeted investments, tax incentives, and credits for building domestic supply of metals, materials, and batteries, deploying this capital and reaping the fruits of these investments in the form of expanded production&nbsp;will take years, suggesting the next three years may see a slowing in the pace of EV adoption and growth of renewable energy generation, not due to lack of demand, but due to lack of adequate supply.</p>
<p>Governments keep heads firmly planted in sand.&nbsp;The aforementioned projections are far from the first time we’ve seen the caution flag raised when it comes to pending supply shortages, not to mention the continuing dominance of China when it comes to production of EV-critical components, including metals, cathodes, anodes, and batteries. One would think other governments would do all they could to facilitate the development of local supply of these materials and products, if only to use up the money they themselves set aside for the projects and ensure the environmental goals and timetables they themselves have set are meaningful and achievable. One would be wrong. We previously highlighted the apparent disconnect between governments’ “commitments” to carbon reduction and environmentalism expressed in lofty goals of banning ICE vehicles, oil &amp; gas drilling, and reaching net-zero economies by some decades in the future, and those same governments’ regulatory bodies and rules and regulations they develop and enforce doing all they can to hamper and slow down the development of new metal resources, permitting the building of metal processing plants, or even recycle plants for end-of life batteries.</p>
<p>Examples of this dichotomy include the comments coming out of the recently concluded meeting of member nations of the International Seabed Authority (ISA), the UN-created body set up to develop rules and regulations around deep-sea mining in international waters. In the prior week, we mentioned Germany’s negative stance on the issue of deep-sea mining—the one unexploited resource that promises to be larger than any land-based mining for critical metals such as nickel, cobalt, and copper. Last week, the&nbsp;French government&nbsp;came out with a similar, largely hypothetical, objection to ratifying final regulations around deep-sea mining, siting lack of incontrovertible scientific data around the potential environmental impact of picking up fist-sized nodules lying on an ocean floor in regions of the ocean floor virtually devoid of biomass. Even an&nbsp;Australian mine executive&nbsp;echoed these concerns.</p>
<p>Interestingly, these comments came just days before the largest&nbsp;pilot project in recent history was successfully concluded by TMC, the company actively working on developing the technology of deep-sea nodule collection and onshore refining of battery-critical metals. Besides collecting 4,500 mt of nodules while traversing 80 km of the seafloor at depths of 3-4 km, the pilot program also included a vessel full of affiliated and independent scientists that deployed thousands of underwater sensors and followed the collection ship to monitor sediment plumes and mid-water release of process water from the collector ship. While the technical evaluation portion of the project has been completed, the scientific and monitoring work continues and, when concluded, will provide objective scientific data on the environmental impact of the collection process, which should go a long way in assuaging political concerns over the potential impact of deep-sea mining, certainly as compared with on-land mining alternatives.</p>
<p>Canada takes the first step in countering China’s expansionist plans.&nbsp;Acknowledging the geopolitical threat presented by the Chinese government’s (and there are no truly private companies in China) participation in global supply chains, especially those related to the energy transformation currently underway in developed economies,&nbsp;the Canadian government has ordered&nbsp;three Chinese firms to exit (i.e., divest their share of) Canadian lithium mining operations in the country. While the initial impact seems to affect&nbsp;two Canadian junior lithium mining firms, China’s involvement in the Canadian battery metals industry goes far beyond and similar government actions may affect a&nbsp;dozen or more companies&nbsp;looking to develop nickel, cobalt, copper, and other metal resources in the country to help reduce Chinese dominance of the supply chain. We can only hope the US and EU governments take a similar approach to protecting their strategic resources from Chinese exploitation and predatory trading practices.</p>
<h2>Chemicals &amp; Materials</h2>
<p>Adhesives play a key role in drive for sustainability.&nbsp;Last year, we wrote about the role chemicals and materials companies play in the drive for more sustainable manufacturing and production practices across multiple industries and markets. Adhesives and sealants are one such area. Growth of sustainable practices in the manufacturing of these products and their role in enabling their customers to meet sustainability and environmental requirements related to their industries are two of the ways adhesives and sealants companies help the world address the issues of sustainability. An ubiquitous element in multiple industries and sectors, adhesives and sealants play a key role in&nbsp;construction,&nbsp;renewable energy generation, and&nbsp;light-weighting&nbsp;in the automotive and transportation sectors, among others. Adhesives and sealants companies are also aggressively working on reducing their own carbon footprint and improving the sustainability of their operations.&nbsp;H.B. Fuller, the only pure-play adhesives and sealants publicly traded company in the US, is an excellent example of a responsible manufacturer, delivering tangible results when it comes to improving its sustainability profile and operations.</p>
<h2>Rating and Price Target Changes</h2>
<p>ALB –&nbsp;Deutsche Bank raised its price target (PT) to $325 from $305 and reiterated its Buy rating; Berenberg also raised its PT to $275 rom $270 and maintained its Hold rating; RBC raised its PT to $380 from $371 and reiterated its Outperform rating.</p>
<p>ASH –&nbsp;Credit Suisse raised its PT to $125 from $120 and reiterated its Outperform rating; UBS raised its PT to $131 from $127 and reiterated its Buy recommendation; Deutsche Bank raised its PT to $125 from $120 and reiterated its Buy rating; Wells Fargo raised its PT to $118 from $104 and maintained its Equal Weight rating.</p>
<p>CTVA –&nbsp;RBC raised its PT to $78 from $72 and reiterated its Outperform rating; BMO raised its PT to $76 from $72 and reiterated its Outperform rating; Mizuho Securities raised its PT to $76 from $74 and reiterated its Buy recommendation.</p>
<p>EAF –&nbsp;RBC lowered its PT to $4 from $7 and maintained Sector Perform rating.</p>
<p>ECL –&nbsp;Credit Suisse lowered its PT to $170 from $175 and reiterated its Outperform rating; UBS lowered its PT to $171 from $184 and reiterated its Buy recommendation.</p>
<p>EMN –&nbsp;Tudor Pickering upgraded the stock to Buy from Hold and raised its PT to $99 from $98.</p>
<p>FMC –&nbsp;CFRA raised its PT to $135 from $125 and maintained its Hold rating.</p>
<p>KWR –&nbsp;Deutsche Bank raised its PT to $200 from $180 and reiterated its Buy recommendation.</p>
<h2>Recent Reports and Future Events</h2>
<p>Fireside Chat: Chairman &amp; CEO Gerard Barron, CFO Craig Shesky, and Project Director for NORI Grant Lindner, November 16, 2022, at 10:00 am EST</p>
<p>TMC the metals company, Inc. (TMC) – Initiation of Coverage – Tapping Untapped Resource to Address Unmet Need</p>
<p>Westwater Resources, Inc. (WWR) – Company Update Report – Steady Progress Deserves a Closer Look</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>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 another solid week for the market, both indexes we monitor posted mid-single-digit improvements, with the Russell 2000 and the S&amp;P 500 increasing 4.6% and 5.9%, respectively. Our WTR-CMI index outperformed the market by delivering 7.6% W/W growth, led by KWR’s 23.5% bounce following solid 3Q results and AVNT’s 16.6% and ECL’s 15.5% improvements off post-3Q profit taking. Ag-chem companies saw their stocks consolidate during the week, with AVD and CTVA losing 4.7% and 0.7%, respectively, and FMC posting a modest 0.8% gain.
Ag-chem innovations continue.&nbsp;The last decade saw a sharp decline in regulatory approvals of new chemical active ingredients in the ag-inputs market. However, that does not mean that innovation of new ag-chem formulations has been absent, with FMC’s recent launch of a&nbsp;new fungicide formulation, which is a good example of continuing efforts to combat agricultural pests and increase crop yields with existing products.
Battery materials expansion efforts.&nbsp;CMP announced a&nbsp;multiyear supply agreement&nbsp;with LG Energy Solutions to supply the Korean battery manufacturer with lithium carbonate starting in 2025, when the first phase of CMP’s production plant is expected to come online. Meanwhile, NMG announced a completion of a&nbsp;financing round, during which it raised $50 million&nbsp;from three strategic investors, with the intention to use the funds to update its 2022 feasibility study for its phase 2 commercial integrated operation, including an open-pit graphite mine near Montreal and a battery material plant in Becancour, Quebec.
SHW expands in industrial coatings.&nbsp;The company announced&nbsp;the acquisition&nbsp;of German-based Specialized Industrial Coatings Holding (SIC Holding), which has annual sales of more than €91.5 million. The transaction is expected to close in early 2023.

WTR-CMI WEEKLY PERFORMANCE


Source: Y-Charts as of November 11 close

Ag-Tech and Bio-Ag
Increasing importance of Brazilian ag market.&nbsp;The Brazilian agricultural industry&nbsp;continues to grow&nbsp;and increase its share of global grain markets. Driven by strong demand, the depreciating real (versus the US dollar), high commodity prices, and expanding farmland (one of the few geographies with increasing acreage under farming), Brazilian farmers are also benefiting from increased penetration of modern technology, including bio-based inputs, seeds, soil monitoring, and precision planting and spraying, which we believe will positively affect the growth of FMC, CTVA, BIOX, and BHIL, among others.
An alternative to farmland expansion.&nbsp;As arable land is in short supply in the US and other developed countries, making expansion by extension a difficult proposition, better land use appears to be one of the solutions to acreage growth. One such method is the use of&nbsp;Controlled Environment Agriculture&nbsp;(CEA). Indoor, hydroponic, and greenhouse growers are expanding their operations when it comes to specialty crops and increasing their market share and importance in the food supply chain as a result. While past its infancy stage, as the CEA industry is far from mature, offering plenty of opportunity for outsized growth both for its practitioners and for the companies supplying greenhouses, other related infrastructure, materials, equipment and services, investors may want to begin exploring.
Automotive &amp; Transportation Markets
October growth comes with a warning.&nbsp;While&nbsp;China’s new car sales&nbsp;increased 6.9% Y/Y in October, the pace was well off the mid-20s improvement seen in September. Furthermore,&nbsp;new energy vehicle (NEV) sales were flat M/M, although they remained above 600K units for a third straight month. Similarly, while&nbsp;the UK’s market&nbsp;also grew in October, up 26%, growth of EVs slowed within that period, up 23% Y/Y, possibly signaling that recent price increases passed on by EV OEMs to customers to help offset skyrocketing metal costs are having a dampening effect on demand. Overall, the UK’s automotive industry is expected to post its worst year since 1982 when it comes to automotive production. Then&nbsp;there is Russia, where new car registrations tumbled 63% in October, as the industry is feeling the impact of western sections both from a consumer-spending perspective, as well as from a lack of supply of foreign autos Russian consumers have come to prefer, as global OEMs are pulling their operations out and cutting ties with their JV partners in the country.
With Chinese sales remaining volatile, partially due to the government’s zero tolerance policies when it comes to COVID-19, European and North American sales under threat of&nbsp;a slowing economy and consumer sticker shock, not to mention semiconductor shortages that are expected to persist through 2023, recovery in auto OEM-related product demand, including coatings, adhesives, sealants, plastics, and composites, may be several quarters away, suggesting continued caution when it comes to companies in our index with high exposure to these markets, such as PPG and AXTA, but also AVNT, HXL, EAF, and FUL.
Energy &amp; Battery Technology
Battery metals growth accelerating, but bottlenecks are emerging.&nbsp;In 1H22, the growth and proliferation of new energy vehicles (NEVs, to use the Chinese term) accelerated globally, which has driven a sharp increase in&nbsp;critical battery metals growth. Lithium, as measured by lithium carbonate equivalents (LCE), grew to 117,200 mt in 1H22, up 76% Y/Y. Similarly, nickel volumes going into NEV batteries grew 50% Y/Y to 88,200 mt during this period and cobalt demand from NEV batteries increased 44% to 18,500 mt. With strong growth of EVs expected to continue, demand for battery metals should grow in tandem, even if at slightly lower rates due to continuing improvement in battery performance, as well as changing preferences when it comes to battery chemistries. Against this strong demand profile, one must juxtapose the realities of supply, which looks to be increasingly constrained when it comes to battery metals and therefore battery production overall. Even with the billions of dollars and euros made available by the US and EU governments recently in the form of targeted investments, tax incentives, and credits for building domestic supply of metals, materials, and batteries, deploying this capital and reaping the fruits of these investments in the form of expanded production&nbsp;will take years, suggesting the next three years may see a slowing in the pace of EV adoption and growth of renewable energy generation, not due to lack of demand, but due to lack of adequate supply.
Governments keep heads firmly planted in sand.&nbsp;The aforementioned projections are far from the first time we’ve seen the caution flag raised when it comes to pending supply shortages, not to mention the continuing dominance of China when it comes to production of EV-critical components, including metals, cathodes, anodes, and batteries. One would think other governments would do all they could to facilitate the development of local supply of these materials and products, if only to use up the money they themselves set aside for the projects and ensure the environmental goals and timetables they themselves have set are meaningful and achievable. One would be wrong. We previously highlighted the apparent disconnect between governments’ “commitments” to carbon reduction and environmentalism expressed in lofty goals of banning ICE vehicles, oil &amp; gas drilling, and reaching net-zero economies by some decades in the future, and those same governments’ regulatory bodies and rules and regulations they develop and enforce doing all they can to hamper and slow down the development of new metal resources, permitting the building of metal processing plants, or even recycle plants for end-of life batteries.
Examples of this dichotomy include the comments coming out of the recently concluded meeting of member nations of the International Seabed Authority (ISA), the UN-created body set up to develop rules and regulations around deep-sea mining in international waters. In the prior week, we mentioned Germany’s negative stance on the issue of deep-sea mining—the one unexploited resource that promises to be larger than any land-based mining for critical metals such as nickel, cobalt, and copper. Last week, the&nbsp;French government&nbsp;came out with a similar, largely hypothetical, objection to ratifying final regulations around deep-sea mining, siting lack of incontrovertible scientific data around the potential environmental impact of picking up fist-sized nodules lying on an ocean floor in regions of the ocean floor virtually devoid of biomass. Even an&nbsp;Australian mine executive&nbsp;echoed these concerns.
Interestingly, these comments came just days before the largest&nbsp;pilot project in recent history was successfully concluded by TMC, the company actively working on developing the technology of deep-sea nodule collection and onshore refining of battery-critical metals. Besides collecting 4,500 mt of nodules while traversing 80 km of the seafloor at depths of 3-4 km, the pilot program also included a vessel full of affiliated and independent scientists that deployed thousands of underwater sensors and followed the collection ship to monitor sediment plumes and mid-water release of process water from the collector ship. While the technical evaluation portion of the project has been completed, the scientific and monitoring work continues and, when concluded, will provide objective scientific data on the environmental impact of the collection process, which should go a long way in assuaging political concerns over the potential impact of deep-sea mining, certainly as compared with on-land mining alternatives.
Canada takes the first step in countering China’s expansionist plans.&nbsp;Acknowledging the geopolitical threat presented by the Chinese government’s (and there are no truly private companies in China) participation in global supply chains, especially those related to the energy transformation currently underway in developed economies,&nbsp;the Canadian government has ordered&nbsp;three Chinese firms to exit (i.e., divest their share of) Canadian lithium mining operations in the country. While the initial impact seems to affect&nbsp;two Canadian junior lithium mining firms, China’s involvement in the Canadian battery metals industry goes far beyond and similar government actions may affect a&nbsp;dozen or more companies&nbsp;looking to develop nickel, cobalt, copper, and other metal resources in the country to help reduce Chinese dominance of the supply chain. We can only hope the US and EU governments take a similar approach to protecting their strategic resources from Chinese exploitation and predatory trading practices.
Chemicals &amp; Materials
Adhesives play a key role in drive for sustainability.&nbsp;Last year, we wrote about the role chemicals and materials companies play in the drive for more sustainable manufacturing and production practices across multiple industries and markets. Adhesives and sealants are one such area. Growth of sustainable practices in the manufacturing of these products and their role in enabling their customers to meet sustainability and environmental requirements related to their industries are two of the ways adhesives and sealants companies help the world address the issues of sustainability. An ubiquitous element in multiple industries and sectors, adhesives and sealants play a key role in&nbsp;construction,&nbsp;renewable energy generation, and&nbsp;light-weighting&nbsp;in the automotive and transportation sectors, among others. Adhesives and sealants companies are also aggressively working on reducing their own carbon footprint and improving the sustainability of their operations.&nbsp;H.B. Fuller, the only pure-play adhesives and sealants publicly traded company in the US, is an excellent example of a responsible manufacturer, delivering tangible results when it comes to improving its sustainability profile and operations.
Rating and Price Target Changes
ALB –&nbsp;Deutsche Bank raised its price target (PT) to $325 from $305 and reiterated its Buy rating; Berenberg also raised its PT to $275 rom $270 and maintained its Hold rating; RBC raised its PT to $380 from $371 and reiterated its Outperform rating.
ASH –&nbsp;Credit Suisse raised its PT to $125 from $120 and reiterated its Outperform rating; UBS raised its PT to $131 from $127 and reiterated its Buy recommendation; Deutsche Bank raised its PT to $125 from $120 and reiterated its Buy rating; Wells Fargo raised its PT to $118 from $104 and maintained its Equal Weight rating.
CTVA –&nbsp;RBC raised its PT to $78 from $72 and reiterated its Outperform rating; BMO raised its PT to $76 from $72 and reiterated its Outperform rating; Mizuho Securities raised its PT to $76 from $74 and reiterated its Buy recommendation.
EAF –&nbsp;RBC lowered its PT to $4 from $7 and maintained Sector Perform rating.
ECL –&nbsp;Credit Suisse lowered its PT to $170 from $175 and reiterated its Outperform rating; UBS lowered its PT to $171 from $184 and reiterated its Buy recommendation.
EMN –&nbsp;Tudor Pickering upgraded the stock to Buy from Hold and raised its PT to $99 from $98.
FMC –&nbsp;CFRA raised its PT to $135 from $125 and maintained its Hold rating.
KWR –&nbsp;Deutsche Bank raised its PT to $200 from $180 and reiterated its Buy recommendation.
Recent Reports and Future Events
Fireside Chat: Chairman &amp; CEO Gerard Barron, CFO Craig Shesky, and Project Director for NORI Grant Lindner, November 16, 2022, at 10:00 am EST
TMC the metals company, Inc. (TMC) – Initiation of Coverage – Tapping Untapped Resource to Address Unmet Need
Westwater Resources, Inc. (WWR) – Company Update Report – Steady Progress Deserves a Closer Look
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 November 11, 2022