Piper Sandler has adjusted its outlook on shares of Oiln (NYSE: OLN), reducing the price target to $57.00 from the previous $75.00, with an Overweight rating on the stock, following Oiln's second-quarter earnings and updates to the company's guidance, which included the operational impact of Hurricane Beryl.
The storm is expected to affect the company's earnings by approximately $100 million in the third quarter, said an analyst from Piper Sandler.
The analyst indicates a slower recovery for Oiln's chloralkali and epoxy businesses than previously forecasted. They acknowledged that while macroeconomic events such as lower interest rates may support earnings, the pace of recovery is anticipated to be more gradual. The updated model incorporates recent checks around Oiln's major end products.
The analyst also reflects broader economic concerns, suggesting that the economic activity in the European Union and Asia may remain stagnant or even decline occasionally. This outlook casts doubt on a robust earnings recovery for Oiln in the short term.
Piper Sandler's assessment points to a more cautious earnings trajectory for the company, projecting that a significant rebound in earnings is unlikely in the next 6 to 9 months.
Meanwhile, BofA Securities downgraded Olin (NYSE:OLN)'s stock from Buy to Neutral, citing a slower-than-expected industrial recovery and a subdued rebound in the epoxies market. The firm also adjusted its estimated EBITDA for Olin for the years 2024 and 2025, reflecting an impact from the Freeport, Texas plant outage and a decline in demand.
KeyBanc and RBC Capital also reduced their price targets for Olin, due to a challenging second half of the year. The new EBITDA guidance is set at approximately $940 million, or $1,040 million when excluding the impact of Hurricane Beryl. Olin anticipates that the impact of the hurricane will be confined to the third quarter.
JPMorgan (NYSE:JPM) upgraded Olin's stock from Neutral to Overweight, focusing on the company's strategic management of chlorine and caustic soda production. The firm's analysis suggests that Olin's conservative approach to production could lead to a more favorable position in the market.
InvestingPro Insights
Piper Sandler's revised outlook on Olin Corporation (NYSE: OLN) comes at a time when the company is trading near its 52-week low, which could represent a potential opportunity for investors considering the company's history of maintaining dividend payments for 51 consecutive years. According to an InvestingPro Tips, Olin's management has been proactively buying back shares, signaling confidence in the company's value proposition. Additionally, the same source suggests that Olin offers a high shareholder yield, which could be attractive to income-focused investors.
InvestingPro Data shows a market capitalization of $5.24 billion and a P/E ratio of 19.22, which is nearly consistent with the adjusted P/E ratio for the last twelve months as of Q2 2024. Despite a revenue decline of 16.32% over the same period, the company's valuation implies a strong free cash flow yield, as noted in another InvestingPro Tips. This could indicate that Olin's stock is undervalued relative to its cash-generating ability, a factor that might interest value investors.
Investors looking for more insights can find a total of 11 additional InvestingPro Tips for Olin, which could further inform their investment decisions. To access these valuable tips and real-time metrics, consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription at InvestingPro.
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