Nomura Securities Cuts Price Target on Huntsman (HUN) to $19 as Shares Trade Down
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Nomura Securities maintained a Buy rating on Huntsman (NYSE: HUN), and cut the price target to $19.00 (from $20.00), as shares trade down 14.9%. Nomura cut 3Q EBITDA estimates by $39mn and 4Q by $27mn. The cut to 2H16 estimates is likely to delay but not derail Nomura's positive thesis on HUN.
Analyst Aleksey Yefremov commented, "Following the strong performance in Jul-Aug, HUN shares have fallen 14.9% in Sep, outpacing a -1.5% decline in the S&P 500 and -3.4% the for S&P 500 Materials index. What happened: The sell-off followed cautious comments on the 3Q earnings outlook due to the: 1) effect of flooding on the Gulf Coast, 2) delayed benefits of cost cuts in Performance Products, 3) impact of rising ethylene on EO/EG businesses, 4) worse than expected MTBE. HUN will also incur unspecified one-time TiO2 separation cash expenses, which could be material, in our view. We lower 3Q and 4Q HUN estimates herein. Overall, we cut 3Q EBITDA by $39mn (12%) and 4Q by $27mn (10%). We estimate a ~$10mn negative surprise is due weather / other transient issues. We also trim our 2017E by 3%. We lower our SOTP-based TP by $1 to $19, implying 2017E FCF yield of 7.6% and EV/EBITDA of 7.1x."
Shares of Huntsman closed at $14.69 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst PT Change
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