Tronox Holdings (TROX) is likely to see an increase in earnings before interest, taxes, depreciation, and amortization next year amid a recovery in operating rates representing a tailwind of $55 million into 2025, UBS Securities said in a note on Thursday.

The company is expected to benefit from higher titanium dioxide pricing and potential demand recovery driven by interest rate cuts and China's stimulus measures, according to the note.

"Interest rate cuts and potential China stimulus could be a catalyst for eventual restocking [of titanium dioxide], while duties in Europe add upward bias to pricing," UBS said.

More than 50% of Tronox's sales in markets are shielded from Chinese supply through tariffs in the US, and potential protections in Europe, Brazil, and India could boost pricing power and provide a tailwind for earnings, UBS added.

These factors will likely result in EBITDA of around $800 million in 2025, up $200 million from a year earlier, UBS said.

The firm expects that Tronox's free cash flow will improve by $200 million and exceed $300 million annually due to a decrease in capital expenditures following a period of high spending, operational improvements and cost-saving initiatives.

UBS upgraded its rating on Tronox's stock to buy from neutral and increased the price target to $19 from $17.

Shares of the company were up 5.3% in recent trading.

Price: 14.37, Change: +0.72, Percent Change: +5.27