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Investing.com -- Shares of Olin Corporation (NYSE:OLN) declined 10% today after the company released a weaker-than-expected profit outlook for the first quarter of 2025. The chemical and ammunition manufacturer forecasted adjusted EBITDA to be between $150 million and $170 million, falling short of the consensus estimate of $227.1 million.
The company’s financial results for the fourth quarter of 2024 showed a net income of $10.7 million, or $0.09 per diluted share, a significant decrease from the $52.9 million, or $0.43 per diluted share, reported in the same quarter the previous year. Sales increased slightly from the fourth quarter of 2023, rising to $1,671.3 million from $1,614.6 million. However, full-year net income for 2024 plummeted to $108.6 million, or $0.91 per diluted share, compared to $460.2 million, or $3.57 per diluted share, in 2023.
Ken Lane, Olin’s President and CEO, acknowledged the challenging industry conditions expected to persist into 2025 but expressed confidence in the company’s ability to generate higher trough-level earnings and cash flow through cost control and optimization of core businesses. The company also highlighted its entry into the domestic polyvinyl chloride (PVC) resin market through an EDC tolling agreement and its acquisition of the ammunition manufacturing assets of AMMO, Inc., which is expected to close in the second quarter of 2025.
Despite these strategic moves, investors seemed to be more concerned with the immediate future, as analyst comments reflected a focus on the disappointing first quarter guidance. Keybanc analyst Aleksey Yefremov pointed out that "investors will be more focused on meaningfully disappointing 1Q guidance." He suggested that the company might be struggling to find customers for its chlorine and derivatives at current prices, which could be a source of weakness in volumes and market share.
Mizuho (NYSE:MFG) analyst John Roberts also responded to the outlook by lowering the price target on Olin to $33.00 from $38.00, maintaining a Neutral rating. Roberts noted that the guidance for the first quarter was below expectations, and he adjusted his estimates for 2025 and 2026 accordingly.
The stock’s movement reflects investor sentiment following the company’s announcement of its first-quarter outlook and its performance in the fourth quarter of 2024. As the market digests this information, Olin’s strategies and performance in the coming quarters will be closely monitored.
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