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Investing.com - Mizuho downgraded Orion Engineered Carbons S.A. (NYSE:OEC) from Neutral to Underperform on Friday, setting a price target of $9.00, which represents a 13% downside from current levels. According to InvestingPro analysis, the stock appears undervalued at current prices, despite trading at a relatively high P/E ratio of 39x.
The downgrade comes despite OEC stock rising approximately 14% since its last quarterly report, outperforming the S&P Materials index which gained 5.5% during the same period.
Mizuho cited ongoing industry challenges, noting that U.S. tire imports increased in July data, contrary to market hopes for a decline. The firm emphasized that imported tires containing carbon black effectively compete with U.S. production of carbon black, Orion’s core business.
The research firm also highlighted concerns about Orion’s debt position, which was recently assigned a "Outlook Negative" rating by a major ratings agency.
Orion’s net debt-to-EBITDA ratio stands at approximately 3.5x, near an all-time high and significantly above the more typical target of around 2x, according to Mizuho’s analysis.
In other recent news, Orion Engineered Carbons reported its financial results for the second quarter of 2025, which fell short of analysts’ expectations. The company announced earnings per share (EPS) of $0.32, missing the anticipated $0.37 by 13.51%. Additionally, revenue was reported at $466.4 million, slightly below the forecasted $473.35 million, marking a 1.47% shortfall. Despite these results, Orion’s stock experienced a notable increase in after-hours trading. Furthermore, Jefferies has adjusted its price target for Orion Engineered Carbons, reducing it from $15.00 to $14.00. The firm maintained its Buy rating on the stock, citing near-term demand headwinds as a reason for the lowered target. These developments highlight ongoing challenges and adjustments for the company in the current market environment.
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