Alembic Global analyst Hassan Ahmed reiterated a Buy rating on Westlake Chemical Corp (WLK) today. The company’s shares closed on Friday at $69.65, close to its 52-week low of $59.78.
Ahmed observed:
“We expect the global chlor-alkali market to be in a sold-out state by 2023. Annualizing Q4’18 EBITDA, while crediting it for reversal of the FIFO- and integration-related charges, results in EBITDA of USD1,700m. Assigning a sum-of- the-parts (SOTP)-generated 6.1x multiple to this EBITDA, we calculate a bear-case valuation of USD73 per share—near current levels—suggesting that the market is factoring in a continuation of weak Q4’18 conditions. Since Q4’18, polyethylene prices have risen 3c/lb and PVC prices are up 4c/lb; H1’19 caustic prices are expected to rise USD30 per ton. Layering these prices hikes onto Q4’18 annualized EBITDA produces 2019 EBITDA of USD2,112m (versus current consensus of USD1,955m) —still conservative, in our view, as it does not incorporate a seasonal recovery in product volumes.”
According to TipRanks.com, Ahmed is ranked 0 out of 5 stars with an average return of -5.5% and a 35.0% success rate. Ahmed covers the Consumer Goods sector, focusing on stocks such as Venator Materials Plc, LyondellBasell, and Celanese Corp.
The word on The Street in general, suggests a Hold analyst consensus rating for Westlake Chemical Corp with a $79.11 average price target, representing a 13.6% upside. In a report issued on February 19, Barclays also maintained a Buy rating on the stock with a $90 price target.
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Westlake Chemical Corp’s market cap is currently $8.95B and has a P/E ratio of 9.14. The company has a Price to Book ratio of 1.60.
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Westlake Chemical Corp. manufactures and markets petrochemicals, polymers and fabricated building products. It operates through the Olefins and Vinyls segments. The Olefins segment manufactures ethylene, polyethylene, styrene, and associated co-products at the manufacturing facility in Lake Charles and polyethylene at the Longview facility.
