On October 8, 2020, LSB Industries, Inc. (“LSB”) announced a new nitric acid supply contract with a customer for a term of seven years. Under the contract, LSB will supply between 70,000 and 100,000 tons of nitric acid per year, with sales beginning during FQ1 2021.
LSB’s management has clearly communicated commercial opportunities, and Global Value Research Company (“GVRC”) views this announcement as executional follow-through. GVRC’s August 13, 2020 price target of $11.15 is premised on normalized EBITDA of $121.9 million and an EV/EBITDA multiple of 9.0x. GVRC expects these assumptions to be validated throughout 2021 and believes LSB continues to present a compelling case for investment.