Oiln (OLN) PT Raised to $75 at Piper Sandler

Piper Sandler analyst Charles Neivert raised the price target on Oiln (NYSE: OLN) to $75.00 (from $72.00) while maintaining a Overweight rating.

The analyst commented, "OLN has perhaps the strongest margin leverage to the upside of the companies covered in this report. The company is operating its chlor/alkali facilities at slightly above 50% of capacity. This is by design, but the typical margin associated with such a low operating rate is usually negative. OLN’s chlor/alkali margin are nowhere near negative. Other parts of OLN’s chlor/ alkali segment are also operating at low rates, including EDC. Price for both chlorine and caustic soda is rising and volumes are also moving higher. The epoxy business, which was suffering significant EBITDA loses in 2H23, has returned to slightly positive EBITDA on realignment efforts of the company. We expect that epoxy volumes, especially in Europe, will begin a slow rebound as demand increases and the realignment efforts move ahead. • Winchester has been a consistent earner and will grow going forward on new military applications which OLN won the contract for. • As volumes in epoxy and chlor/alkali expand we would expect to see a strong acceleration in earnings for the company. Our EBITDA estimate for 2025 of $1.8B is the highest on the street and accounts for this acceleration driven by better fixed cost absorption. Our 2H25 earnings annualize at about $1.9 B but are still below our estimate of midcycle EBITDA and far below peak. • Our $75 PT is based on an EV/EBITDA multiple of 6.5x on ‘25E EBITDA of $1.8B (assumes $2.6B net debt and 122M shares), up from 6.0x prior to reflect a slight reduction in 2025 earnings, but a higher degree of confidence in their ability to achieve it. As is typical for cyclicals, multiples rise as earnings move below midcycle."

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