JPMorgan Downgrades Orion Engineered Carbons S.A. (OEC) to Neutral

JPMorgan analyst Jeffrey Zekauskas downgraded Orion Engineered Carbons S.A. (NYSE: OEC) from Overweight to Neutral with a price target of $12.00 (from $18.00).

The analyst comments: "We believe that Orion represents reasonable value – trading at a forecasted 5.2x enterprise value to EBITDA multiple for 2025 and 4.6x for 2026 – but we think that economic uncertainties create valuation risk. We had upgraded Orion to Overweight in November of 2024 at about $15.50 with a price target of $21 thinking there was room for expansion in its EBITDA multiple to 6x from 5x. Orion at that time was trading at a 3x-3.5x multiple point discount to Cabot, its publicly-traded peer. The discount to Cabot is now 1.3x multiple points for 2025, as Cabot’s valuation has moved sharply lower. We think that multiple expansion at this juncture is less likely with the valuations of the carbon black companies in a normal relative range. We estimate Orion’s free cash flow yield at ~15% for 2026 due to likely sharply lower expected capital expenditures following the completion of an expansion project in battery materials. Orion trades at a projected EBITDA multiple of 4.6x for 2026 versus Cabot’s 6.0x multiple, which we believe is a reasonable discount of about 1.5x turns. Cabot and Orion are both leaders in carbon black, which is a reinforcement material for tires, and in specialty blacks for coatings, plastics, and flexible materials."

For an analyst ratings summary and ratings history on Orion Engineered Carbons S.A. click here. For more ratings news on Orion Engineered Carbons S.A. click here.

Shares of Orion Engineered Carbons S.A. closed at $12.23 yesterday.

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