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On Wednesday, KeyBanc made a revision to the price target for Oiln (NYSE: OLN), reducing it to $69 from the previous $73, while continuing to endorse the stock with an Overweight rating. The adjustment comes in light of Oiln's recognition that a boost in chlor-alkali pricing and volumes is necessary to hit the anticipated EBITDA of around $1.3 billion for the current year.
The firm now anticipates that Oiln's management will likely lower the EBITDA guidance to between $1.1 billion and $1.2 billion due to a slower-than-expected recovery in demand.
The company's management has a differing view from the market analysis firm CMA regarding the caustic soda market, considering it tighter than CMA's assessment of it being balanced to long. Additionally, Oiln has observed that both customer and producer inventories are below the levels CMA perceives. This discrepancy in market evaluation could impact the company's strategy moving forward.
Oiln is also navigating through challenges in its Winchester segment, where propellant shortages have hindered the ability to adjust prices quickly in response to rising costs during the second quarter. Despite these issues, the company's management is optimistic about rectifying these cost pressures with pricing strategies in the second half of the year. They also do not foresee an increase in consumer concern due to the shortages, which have not been widely publicized.
The company remains positive about the volume of business, especially in chlorine, where it expects to gain more than its fair share of the market due to its unique position as the only producer with spare capacity. While the industry's operating rates are reported to be in the high 80 percent range, Oiln is operating at a significantly lower level, suggesting there is room to capitalize on increased demand.
Lastly, Oiln is keeping an eye on the ongoing U.S. investigation into the antidumping of epoxy, with a decision expected by the end of the year. This outcome could have significant implications for the company's operations and market dynamics.
In other recent news, major developments have been noted in the operations of Olin (NYSE:OLN) Corporation. The European Commission has launched an anti-dumping investigation into epoxy resin imports from China, Korea, Taiwan, and Thailand after a complaint by the Ad Hoc Coalition of Epoxy Resin Producers, which includes Olin Corporation. The coalition alleges these countries are selling products in the European Union at unfairly low prices.
In a recent executive shift, Olin Corporation appointed Deon Carter as Vice President and President of its Chlor Alkali Products & Vinyls division. Carter's (NYSE:CRI) extensive industry experience is expected to enhance the company's operational model. On the financial side, Citi revised its price target for Olin, reducing it to $64 from $67, though maintaining a Buy rating. This adjustment follows Olin's recent earnings call where the company projected its FY24 EBITDA to exceed $1.3 billion.
In its first quarter earnings call, Olin Corporation reported a strong start to 2024, expecting to achieve $1.3 billion EBITDA this year with improvements in Winchester and Epoxy businesses, and anticipates strong demand, particularly in international military.
InvestingPro Insights
In light of the recent price target revision for Oiln (NYSE: OLN) by KeyBanc, it's important to consider some additional metrics and insights from InvestingPro. With a market capitalization of $5.44 billion and a P/E ratio of 15.97, Oiln appears to be valued reasonably in the market, especially when considering the adjusted P/E ratio for the last twelve months as of Q1 2024, which stands at 15.29. Additionally, Oiln's revenue for the same period was $6.624 billion, although it has seen a decline of 24.38% from the previous year.
InvestingPro Tips highlight that Oiln's management has been actively repurchasing shares, which can be an indicator of confidence in the company's value. Furthermore, the stock is currently in oversold territory according to the Relative Strength Index (RSI), which might interest investors looking for potential buying opportunities. It's important to note that while 10 analysts have revised their earnings downwards for the upcoming period, Oiln has maintained dividend payments for 51 consecutive years, which speaks to its commitment to shareholder returns.
For those looking to further explore Oiln's financial health and investment potential, InvestingPro offers additional tips and insights. By using the coupon code PRONEWS24, readers can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking valuable information to guide investment decisions. Currently, there are 9 additional InvestingPro Tips available for Oiln, which could provide a deeper understanding of the company's performance and market position.
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