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Investing.com -- Mizuho downgraded Huntsman Corp to Underperform from Neutral, warning that rising imports of polyurethane MDI from China and weak demand in key end markets could further erode the U.S. chemicals maker’s earnings.
The brokerage said Huntsman’s fundamentals have not improved despite a 20% stock gain since last quarter, and it sees the shares retesting previous lows. It cut its price target to $9, about 19% below current levels.
Huntsman , which gets most of its revenue from MDI products used in insulation, bedding, auto seating, refrigerator panels and sneakers, faces intensified competition from overseas producers.
Mizuho said China’s construction downturn has slowed domestic demand, pushing more MDI output into exports that are now flowing into the U.S. market.
The firm added that Huntsman’s exposure to durables, among the weakest end markets, is another drag on volumes and margins. U.S. consumers of MDI are also holding higher inventories amid trade-policy volatility, further weighing on sales.
Mizuho pointed to Huntsman’s balance sheet as a growing concern. Net debt is about 4.2 times expected earnings, more than double typical leverage levels, and the company earlier this year amended its credit agreements to add flexibility.
The bank also flagged risks to Huntsman’s 9% dividend yield, noting that dividends at peers including Chemours, Dow, Tronox and International Flavors & Fragrances have already been cut.
“We view the dividend yield at risk based on breakeven-to-loss earnings into 2027,” Mizuho said.
The brokerage now expects Huntsman to generate $450 million in EBITDA over the next 12 months, down from its earlier $500 million estimate.