Citi Starts Westlake Chemical (WLK) at Buy

Citi initiates coverage on Westlake Chemical (NYSE: WLK) with a Buy rating and a price target of $72.00.

Analyst P.J. Juvekar comments "In our view, the acquisition of Axiall in August 2016 for ~$2.5B was very timely as the chlor alkali cycle is turning and could help offset a potential ethylene downturn in 2018. ECU profitability is likely to improve with the cycle emerging from a downturn as the industry is absorbing capacity additions from 2014 and no major expansions are on the 5-year horizon. Besides consolidation in North America, IHS expects rationalization of ~1mmt chlorine capacity in the EU driven by regulations and ~5mmt PVC capacity in China. While we expect an ethylene downturn in 2018, pro-forma WLK is short ethylene by ~1.9B lbs and management could pick up ethylene assets at attractive valuations or increase its stake in the JV cracker with Lotte, in our view."

For an analyst ratings summary and ratings history on Westlake Chemical click here. For more ratings news on Westlake Chemical click here.

Shares of Westlake Chemical closed at $61.99 yesterday.

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