Westlake ( NYSE: WLK ) wobbles between gains and losses Wednesday as J.P. Morgan upgraded shares to Overweight from Neutral, seeing room for the stock's trading multiple to rise.
J.P. Morgan's Jeffrey Zekauskas noted peers Dow Inc. ( DOW ) and Olin ( OLN ) currently trade at a ~5.3x multiple of estimated 2023 EBITDA, while Westlake ( WLK ) is mired at ~3.6x, and the analyst said he sees no reason for the gap.
Dow offers 5%-plus dividend yield, and Olin is likely to buy back ~20% of its outstanding shares in 2022, which differentiate the two companies from Westlake ( WLK ), but Zekauskas said all three companies have very strong balance sheets, and Westlake has an estimated 2023 free cash flow yield of 17%.
Zekauskas said his 2023 stock price target for Westlake ( WLK ) is $135/share, reflecting a ~4.6x multiple of estimated 2023 EBITDA.
Westlake ( WLK ) recently reported Q2 GAAP earnings of $6.60/share on revenues of $4.5B .
For further details see:
Westlake raised to Overweight at JPM as undervalued vs. chemical peers