Seaport Global Securities Downgrades Stepan Company (SCL) to Neutral

Seaport Global Securities downgraded Stepan Company (NYSE: SCL) from Accumulate to Neutral with a price target of $63.00.

Analyst Michael Harrison commented, "SCL posted impressive Q1 results that saw overall operating margin up 310 bps YoY. We believe much of this improvement was driven by volume growth and by recent moves that have combined to generate better utilization rates and improved operating efficiency. SCL also saw strong YoY benefits from raw material tailwinds, which we believe should extend into Q2 before becoming a concern as we look into 2H. As SCL is still passing lower raw material costs through to its customers, a potential 2H increase in key raws could create a margin squeeze. As such, we are downgrading from Accumulate to Neutral as we believe the risk/reward is becoming less attractive. We increased our price target from $61 to $63 to reflect our increased confidence in Polymers volume growth and in continued efforts to improve efficiency, including the DRIVE program. Our new model suggests EPS growth in 2017 could be quite modest as the raw material gains are given back; we believe the growth trajectory becomes more attractive again in 2H:17. We continue to view SCL as an interesting long-term transformation story for value-oriented investors"

For an analyst ratings summary and ratings history on Stepan Company click here. For more ratings news on Stepan Company click here.

Shares of Stepan Company closed at $60.99 yesterday.

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