Key Takeaways
- Shares of Solvay advanced 2.9% to €26.50 following Deutsche Bank’s upgrade from Sell to Hold
- Analyst Tristan Lamotte increased the price target from €23.50 to €26
- The bank estimates rare earth operations could boost EBITDA by €100 million, representing a 13% increase
- A non-binding agreement with Viridis Mining was signed to secure rare earth materials from Brazilian sources
- Concerns remain around potential earnings guidance revisions, soda ash market weakness, and cash flow constraints
Shares of Solvay surged 2.9% to reach €26.50 on Thursday following a rating improvement from Deutsche Bank and heightened market attention toward the company’s rare earth initiatives.
Tristan Lamotte, analyst at Deutsche Bank, elevated his recommendation on the Belgian specialty chemicals company from Sell to Hold while simultaneously boosting the price objective to €26 from €23.50. This adjustment followed a period during which Solvay shares trailed the SX4P European chemicals benchmark by 10% following the firm’s November 2025 downgrade, resulting in a more reasonable valuation framework.
The shares are currently valued at 7.5 times the 2026 projected EV/EBITDA multiple. While this represents a premium versus industry peers, Deutsche Bank now views the valuation as warranted considering the potential upside from rare earth activities.
According to Deutsche Bank’s analysis, the market has failed to properly recognize the value embedded in Solvay’s rare earth processing operations. The firm’s models suggest these activities could contribute an initial €100 million to EBITDA, representing roughly 13% growth. Should a rare earth project achieve success, additional stock appreciation could follow.
Strategic Partnership Bolsters Rare Earth Ambitions
Earlier in the month, Solvay entered into a preliminary agreement with Viridis Mining and Minerals to obtain rare earth raw materials sourced from Brazil. These materials would supply Solvay’s separation facility located in La Rochelle, France, with full-scale commercial operations anticipated to commence in 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 ambitious objective to capture 30% of the European market for magnet-grade light and heavy rare earth elements by the end of the decade. The partnership with Viridis represents a strategic move to establish supply chain sources beyond Chinese suppliers.
Risks Continue to Loom
While the rating was upgraded, Deutsche Bank stopped short of issuing a buy recommendation. Multiple headwinds continue to challenge the business outlook.
Potential downward revisions to earnings guidance remain a possibility. The soda ash segment faces ongoing market pressures. Construction-related end markets show continued weakness. Additionally, free cash flow generation remains under strain.
The rating improvement reflects a recalibration of risk versus reward following the stock’s recent underperformance rather than an improved fundamental view of Solvay’s core business segments.
Lamotte observed that while the broader SX4P index climbed 10% since the November 2025 downgrade, Solvay failed to keep pace. At the time of that downgrade, shares traded at €27.80 compared to the current €26.50 level.
Deutsche Bank’s revised €26 price target falls marginally below current market prices, reinforcing the neutral stance on the stock.
The preliminary agreement with Viridis Mining carries no binding obligations, and the targeted commercial production timeline at the La Rochelle facility remains two years in the future.
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