Wells Fargo (NYSE:WFC) Likes Kronos (NYSE:KRO) on Pricing Power

After a couple of decades of overcapacity, Wells Fargo (NYSE:WFC) said pure titanium dioxide play Kronos (NYSE:KRO) should enjoy pricing power through 2012 with demand continuing without any capacity expansion in the works for the industry.

Wells initiated coverage on Kronos with an "Outperform."

"KRO is a pure play in the titanium dioxide industry. Industry fundamentals currently favor TiO2 producers after almost 20 years of overcapacity, leading to pricing power of about 30% in 2010. With no industry plans for further capacity expansion, we anticipate pricing power of 15-25% through 2012...we are forecasting earnings per share of $2.65 and $4.27 in 2010 and 2011, respectively, on rebounding volumes and significant pricing power," Wells said.

Kronos soared Wednesday, closing at $42.41, gaining $2.92, or 7.39 percent. Wells put a valuation range on them from $55-58 a share.