JPMorgan analyst Jeffrey Zekauskas downgraded Westlake Chemical (NYSE: WLK) from Neutral to Underweight with a price target of $90.00.

The analyst comments: “Westlake is an efficient producer of polyethylene and vinyl products. Westlake is the most illiquid of the petrochemical companies as only 36m shares float given the 72% ownership of the Chao family. Westlake has more PVC exposure, while its peers Dow and LYB have more polyethylene exposure. We do not believe that the PVC industry has been disrupted by the conflict in the Middle East to the extent that the PE industry has been disrupted. There is little PVC produced in the Middle East and continued high interest rates, and accordingly mortgage rates, are weighing on building and construction demand in North America. Asia also remains a large exporter of PVC and China’s PVC raw materials are mostly coal-based. It’s also the case that Westlake was viewed as relatively more attractive due to its stronger balance sheet, but in an environment of sharply higher earnings for petrochemicals, Dow and Lyondell’s balance sheets have meaningfully improved. We would like equity exposure to lower petrochemical values in the event of a reconciliation of the opposing sides of the conflict. Accordingly, we have lowered our rating on Westlake to Underweight from Neutral.”

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Shares of Westlake Chemical closed at $104.78 yesterday.