Crispr Therapeutics shares tumble after significant earnings miss
CFRA downgraded Westlake Chemical (NYSE:WLK) from Hold to Sell on Wednesday, slashing its price target to $48.00 from $75.00 amid concerns over deteriorating market conditions and valuation concerns. According to InvestingPro data, the stock currently trades at $76.42, significantly above CFRA’s target, though other analysts maintain a more optimistic view with targets ranging from $76 to $101. InvestingPro’s Fair Value analysis suggests the stock is currently fairly valued.
The research firm cited overcapacity issues and weakening demand in key markets, particularly residential construction, as primary factors behind the downgrade. CFRA noted that Westlake shares currently trade at a 49% premium relative to their three-year forward P/E average and a 31% premium to their three-year PEG ratio average. InvestingPro data shows the stock currently trades at a P/E ratio of 25.4x and a price-to-book ratio of 0.94x, with detailed valuation metrics available in the Pro Research Report.
Westlake’s financial performance has shown significant deterioration, with free cash flow declining to -$325 million in Q1 2025 from -$103 million in Q1 2024. The company’s year-end free cash flow dropped to $306 million at year-end 2024 from $1.3 billion at year-end 2023. InvestingPro’s Financial Health Score rates the company as "FAIR" with a score of 2.37 out of 5, reflecting these challenges.
Earnings have also suffered, with CFRA highlighting that Westlake’s EPS fell to negative levels in Q1 2025 and declined 32% for the full-year 2024 compared to 2023. The research firm reduced its 2025 EPS estimate by $1.15 to $1.49 and cut its 2026 forecast by $1.87 to $4.11. Recent data from InvestingPro shows trailing twelve-month revenue of $12.01 billion with a gross profit margin of 14.34%.
CFRA’s new price target represents a forward P/E of 11.7x its 2026 EPS estimate, a discount to Westlake’s three-year average of 12.7x, reflecting continued macroeconomic uncertainty and weakening fundamentals. The firm also pointed to technical analysis supporting its bearish view, noting Westlake’s Lowry Power Rating had fallen to 1, its lowest level in three years.
In other recent news, Westlake Chemical has experienced several adjustments in its price targets from various analyst firms, reflecting ongoing challenges in the commodity chemical markets. Mizuho (NYSE:MFG) lowered its price target for Westlake Chemical from $100 to $82, maintaining an Outperform rating due to difficulties in raising polyethylene prices and lower export volumes to China. Similarly, Truist Securities reduced their target to $92 from $117, citing challenges in the Polyethylene and Polyvinyl Chloride markets but maintained a Buy rating, highlighting the company’s valuation as attractive. UBS also adjusted its target from $118 to $101, maintaining a Buy rating while noting near-term challenges in the Polyethylene Market.
Citi analysts revised their target to $85 from $95, maintaining a Buy rating despite significant reductions in expected EBITDA for the second quarter and 2025. BMO Capital Markets lowered its target to $94 from $103, keeping a Market Perform rating due to weaker short-term fundamentals in Westlake’s Performance Ethylene Monomers platform. Despite these revisions, analysts generally maintain a positive outlook on Westlake Chemical, citing its strong balance sheet and potential benefits from its Housing & Infrastructure segment. These developments reflect the current market conditions impacting Westlake Chemical’s earnings and valuation.
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