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Tuesday, BofA Securities analysts upgraded Olin Corporation (NYSE:OLN) stock from Neutral to Buy.
The upgrade is based on the attractive valuation of the company's shares, which are currently trading at 5.1 times the estimated 2025 EBITDA and 7.3 times the 2024 EBITDA, which was affected by negative factors.
Analysts at BofA Securities highlighted Olin's position as having the best free cash flow yield within their commodity coverage. This financial strength is expected to support the company's ongoing stock buyback program, which is seen as beneficial given the current share prices.
Reducing the price target to $40 from $48, the firm's assessment also took into account the potential impact of the incoming Trump administration.
Olin is considered to be relatively shielded from associated risks due to its limited exposure to China and substantial operations in the United States, which could stand to gain from anticipated lower taxes.
BofA Securities believes that Olin's EBITDA hit its lowest point in 2024 and is projected to rise significantly in 2025.
This optimistic outlook is partly due to the expectation that the company will not face the same severe hurricane-related disruptions it experienced previously. Additionally, higher caustic soda prices and epoxy volumes, along with a slight improvement in demand, are anticipated to contribute to the company's financial recovery in the coming year.
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