OTTR - Otter Tail hit with two downgrades on lower outlook for PVC pipe business
2023-05-03 15:13:20 ET
Otter Tail ( NASDAQ: OTTR ) wobbles between gains and losses after the stock was downgraded at both Siebert Williams Shank and Maxim Group, a day after the stock jumped 6% following better than expected Q1 earnings .
Siebert Williams Shank downgraded Otter Tail ( OTTR ) to Sell from Hold with a $68 price target, saying the market is "once again disassociating itself from Otter Tail's inevitable future fundamentals and the temporary extraordinary conditions inflating the company's PVC pipe margins/earnings today."
If the company's expectation for the new normal level of Plastics segment earnings at $36M-$41M is correct, "the current stock price is very inflated," according to analyst Christopher Ellinghaus.
Maxim Group downgraded Otter Tail ( OTTR ) to Hold from Buy, raising its 2023 EPS forecast after the company's higher than expected Q1 earnings but continuing to forecast lower margins in the Plastics segment going forward leading to EPS declines in 2023-24.
Otter Tail ( OTTR ) expects a decline in PVC pipe margins in H2 and a long-term EPS growth rate of 5%-7% after 2024, analyst Tate Sullivan noted.
More on Otter Tail:
- See financial and valuation comparisons to sector peers
- SA analysis: Let Otter Tail's Plastics Segment Normalize First
- Stock price return: 30% gain YTD, 26% gain in the past 12 months
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Otter Tail hit with two downgrades on lower outlook for PVC pipe business