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On Tuesday, Citi analysts revised their outlook on Westlake Chemical (NYSE:WLK), reducing the price target from $95.00 to $85.00, while still endorsing the stock with a Buy rating. Currently trading at $71.53, the stock appears undervalued according to InvestingPro analysis. The adjustment reflects a significant reduction in expected earnings before interest, taxes, depreciation, and amortization (EBITDA) for both the second quarter and the full year of 2025, following last twelve months’ EBITDA of $1.69 billion.
The lowered EBITDA forecasts, by approximately 38% for Q2 and 21% for FY25, are attributed to several factors. Analysts at Citi cite weak Polyethylene Monomer (PEM) fundamentals and a less robust seasonal recovery in renovation and remodeling (R&R) activities as primary reasons for another challenging quarter ahead. Initial expectations of a modest volume increase due to the typical spring and summer seasonal trends have been tempered by uncertainties surrounding tariffs, leading to a projection of a more subdued volume recovery.
In the PEM segment, the analysts anticipate that the vinyls market will continue to face challenges until there is a permanent resolution to tariff issues. Additionally, integrated polyethylene (PE) margins are expected to remain under pressure due to sluggish pricing and high feedstock costs. For the High-Density Polyethylene (HIP) segment, a more muted seasonal performance is now forecasted, with a recognition of a lower growth environment in the second half of 2025.
Despite these headwinds, Citi maintains a Buy rating on Westlake Chemical shares, citing a risk/reward balance that leans favorably. The firm’s strong balance sheet and its potential operating leverage in the event of a housing market recovery are seen as positive factors that could support the stock price. The new price target of $85, though reduced by $10, reflects this maintained positive stance on the company’s long-term prospects. With analyst targets ranging from $76 to $118 and a consensus recommendation of 2.18 (Buy), the stock shows potential upside. Discover deeper insights and exclusive analysis in the comprehensive Pro Research Report, available on InvestingPro, along with 20+ additional key metrics and ProTips.
In other recent news, Westlake Corporation has announced a regular dividend of $0.525 per share for the first quarter of 2025, continuing its long-standing history of dividend payments since 2004. The payout is scheduled for June 5, 2025, for stockholders on record as of May 20, 2025. Meanwhile, RBC Capital Markets has revised its price target for Westlake Chemical to $96, down from $122, citing challenges in the Performance Ethylene Monomers (PEM) segment and lower-than-expected first-quarter earnings due to outages and increased costs. BMO Capital Markets also adjusted its price target for Westlake Chemical to $94, reflecting weaker short-term commodity fundamentals and market conditions impacting the PEM platform. Additionally, Westlake Corporation’s shareholders recently approved the election of four board members and ratified PricewaterhouseCoopers LLP as the independent auditor for 2025. These developments come as Westlake Chemical faces headwinds in its Performance Engineered Materials segment and has adjusted its guidance for the Housing and Infrastructure Products segment. Both RBC Capital and BMO Capital have maintained their ratings on Westlake Chemical, with RBC Capital retaining an Outperform rating and BMO Capital maintaining a Market Perform rating. Investors are closely monitoring these updates to assess how Westlake navigates current market challenges.
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