Bullish indicating open at $55-$60, IPO prices at $37
Investing.com - JPMorgan downgraded Orion Engineered Carbons S.A. (NYSE:OEC) from Neutral to Underweight on Monday, while reducing its price target to $9.00 from $10.00. The stock, currently trading at $10.53, has experienced a significant decline of -41.74% over the past year, according to InvestingPro data.
The downgrade reflects JPMorgan’s expectation that rubber black pricing negotiations will conclude with flat to lower prices for 2026, potentially triggering negative share price reactions for carbon black companies.
Orion Engineered Carbons, which holds a 9% market share with more than 900,000 tons in annual volume, faces volume challenges in its rubber black segment due to elevated tire imports from Asia into the Western Hemisphere.
The company is also working through volume headwinds in its specialty black segment, according to JPMorgan’s analysis.
JPMorgan noted that Orion currently trades at 5.4x 2026E EV/EBITDA, approximately one multiple point below its peer Cabot (NYSE:CBT), a gap the firm considers reasonable with limited opportunity for Orion’s trading multiples to expand.
In other recent news, Orion S.A. has announced several significant developments. The company plans to discontinue production at three to five of its carbon black lines across facilities in the Americas and EMEA regions by the end of 2025. This decision is part of Orion’s strategy to focus on higher-performing production lines. Furthermore, Orion will distribute an interim dividend of $0.0207 per share in the fourth quarter of 2025, amounting to approximately $1.2 million. The dividend will be paid on October 8, 2025, to shareholders of record as of July 7, 2025, with a Luxembourg withholding tax applied. In leadership news, Chief Financial Officer Jeff Glajch is set to retire in early Q4 2025. He will remain with the company through the end of 2025 to ensure a smooth transition, while Orion initiates a search for his successor. These developments reflect Orion’s ongoing adjustments in both its operational and financial strategies.
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