By Bram de Haas:
Horsehead (NASDAQ:ZINC) enjoyed a run-up since the first time I covered it but also a subsequent retraction. Initially the market agreed the company is on the verge of expanding its EBITDA greatly to enhanced mid-cycle levels, but then unexpected technical difficulties at Mooresboro and a modest capital raise turned the market off. This presents investors with another opportunity to pick up the shares at a good price.
Essentially the Horsehead story is fairly simple although there are a few components to it. The company is transitioning a major part of its production from an old facility to a new facility and meanwhile its numbers look awful. It isn’t entirely certain when the transition to the new facility will be complete, as additional technical difficulties remain a possibility, but the latest management guidance points to mid 2015.
The market is underestimating by how much the numbers are going to