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 contribute up to €100 million in EBITDA, representing a 13% boost
- The Belgian chemicals firm entered into a preliminary agreement with Viridis Mining for Brazilian rare earth feedstock supply
- Concerns remain around possible guidance revisions, softening soda ash demand, and constrained cash generation
Shares of Solvay advanced 2.9% to €26.50 during Thursday’s trading session, buoyed by a Deutsche Bank rating revision and heightened market attention on the firm’s rare earth operations.
Tristan Lamotte, an analyst at Deutsche Bank, upgraded the Belgian specialty chemicals company from Sell to Hold while lifting the price objective from €23.50 to €26. The revision followed Solvay’s 10% underperformance relative to the SX4P European chemicals benchmark since the firm’s prior downgrade issued in November 2025, pushing valuations into more reasonable territory.
The shares are currently valued at 7.5 times projected 2026 EV/EBITDA. While this represents a premium versus industry peers, Deutsche Bank now views the multiple as warranted given the untapped potential in rare earth processing. Analysts estimate the rare earth segment could initially contribute €100 million to EBITDA—a 13% uplift. Should a major rare earth initiative materialize successfully, further upside could emerge.
Brazilian Partnership Strengthens Rare Earth Strategy
Earlier in the month, Solvay announced a preliminary, non-binding agreement with Viridis Mining and Minerals to procure rare earth concentrate from Brazilian sources. This material would supply Solvay’s separation facility in La Rochelle, France, with 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 objective to capture 30% of Europe’s magnet-grade light and heavy rare earth market by decade’s end. The Viridis partnership represents a strategic move toward establishing supply channels independent of Chinese sources.
Headwinds Remain Despite Upgrade
While Deutsche Bank elevated its stance, the firm stopped short of issuing a buy recommendation. Several operational challenges continue to cloud the business outlook.
Potential downward revisions to guidance remain a concern. The soda ash sector faces persistent weakness. Construction-related demand shows sluggishness. Cash flow generation also appears strained.
The upgrade to Hold signals improved risk-reward balance after recent underperformance rather than fundamental optimism about core business trends.
Lamotte observed that the broader SX4P index climbed 10% during the period following the November 2025 downgrade, while Solvay lagged significantly. When the Sell rating was initiated, shares traded at €27.80 compared to today’s €26.50 level.
Deutsche Bank’s revised €26 price target sits marginally below current market prices, maintaining the neutral positioning.
The preliminary agreement with Viridis Mining lacks binding commitments, and commercial rare earth production at the La Rochelle facility remains approximately two years from reality.
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