Huntsman ( NYSE: HUN ) was downgraded to Underweight from Neutral by analysts at J.P. Morgan after the chemical maker cut its earnings guidance. Its stock fell as much as 4.3% to $24.77 a share on Tuesday.
Higher costs for raw material costs, lower demand for petrochemicals and ongoing pandemic lockdowns are squeezing Hunstman’s earnings, the company said last week. It lowered its Q3 guidance for adjusted EBITDA to a range of $260 million-$280 million from a previous level of $310 million-$355 million.
Hunstman’s dividend yield of 3.3%, which is less than the 6% yields for chemical producers Dow Inc. ( DOW ) and LyondellBasell ( LYB ), is one reason for the downgrade, J.P. Morgan said.
“The smaller dividend support is likely to mean less resilience in the Huntsman share price in a choppy market,” Jeffrey J. Zekauskas, analyst at J.P. Morgan, said in the report. “The negative EBITDA dynamic makes it difficult for all of these companies to outperform the year-ahead market.”
J.P. Morgan estimates for Huntsman ( HUN ), Sept. 20 | |||
New | Old | ||
Adj. EPS 2022E | $3.80 | $4.45 | |
Adj. EPS 2023E | $3.05 | $4.30 | |
Adj. EBITDA 2022E (mln) | $1,356 | $1,522 | |
Adj. EBITDA 2023E (mln) | $1,074 | $1,362 |
Seeking Alpha columnist Fade the Market rates Huntsman ( HUN ) as a Buy on its valuation .
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Huntsman falls after J.P. Morgan downgrades to Underweight on earnings cut