Huntsman ( NYSE: HUN ) on Monday was downgraded to a Sector Perform investment rating from Sector Outperform by analysts at Scotiabank. They said the chemical company’s exposure to Europe’s weakening markets is negatively affecting performance.
“Looking ahead, higher interest rates in the U.S. will impact construction market demand for Hunstman’s ( HUN ) output, while demand is already weak in China and Europe,” Ben Isaacson, analyst at Scotiabank, said in a Nov. 7 report.
The bank cut its price target for Huntsman ( HUN ) to $30 from $36, based on a multiple seven times estimated EBITDA for 2023.
Huntsman last week reported adjusted EPS for Q3 of $0.71, and a 3.8% decline in revenue from a year earlier to $2.01 billion, in line with Wall Street’s estimates.
The company cited economic difficulties in some of its key markets that led to cutbacks in its product output.
"Specifically in Europe, the inflationary impact from record high energy prices combined with declining demand is pressuring our European facilities and margins in ways no one anticipated,” Peter R. Huntsman, chairman, president and CEO of the company, said in a statement. “We believe that stability will eventually return, but a 'new normal' will not include favorable energy prices and competitiveness the EU once enjoyed."
Huntsmans ( HUN ) this year had declined 23% through Nov. 4, compared with a 16% drop for the Standard & Poor's 400 mid-cap index ( SP400 ).
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Huntsman downgraded to Sector Perform at Scotiabank on European woes