In a report released yesterday, Steve Byrne from Bank of America Securities reiterated a Buy rating on Olin (OLN – Research Report), with a price target of $69.00.
Steve Byrne has given his Buy rating due to a combination of factors including the company’s positive outlook for the future and the anticipation of higher EBITDA in 2024 compared to 2023. Despite Olin Corporation’s fourth-quarter earnings falling short of expectations, Byrne is encouraged by the management’s forecast for a rebound in profitability, particularly within the Epoxy and Winchester segments. With the upswing in caustic prices and chlorine contract renegotiations, there is an expectation for improved financial performance. Byrne has also raised the estimated EBITDA for 2024 to reflect these optimistic projections and has increased the price objective from $63 to $69 accordingly.
Additionally, Olin’s strategy of reducing its share count is expected to continue, potentially leading to a significant boost in earnings per share as profitability recovers. Byrne’s analysis suggests that with the company’s free cash flow, there will likely be a substantial allocation to share buybacks, enhancing shareholder value. This, combined with the potential impact of market disruptions in the Red Sea on epoxy prices, positions Olin well for improved pricing and margin benefits. Hence, the Buy rating is also supported by Byrne’s expectation of record high earnings per share in 2025, surpassing the previous high despite a projected lower adjusted net income.
In another report released on January 26, Stifel Nicolaus also maintained a Buy rating on the stock with a $65.00 price target.
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Olin (OLN) Company Description:
Olin Corp. engages in manufacturing of chemicals products. It operates through the following segments: Chlor Alkali Products and Vinyls, Epoxy, and Winchester. The Chlor Alkali Products and Vinyls segment manufactures and sells chlorine and caustic soda, ethylene dichloride and vinyl chloride monomer, methyl chloride, methylene chloride, chloroform, carbon tetrachloride, perchloroethylene, trichloroethylene and vinylidene chloride, hydrochloric acid, hydrogen, bleach products and potassium hydroxide. . The Epoxy segment produces and sells epoxy materials, which includes allyl chloride, epichlorohydrin, liquid epoxy resins and downstream products such as converted epoxy resins and additives. The Winchester segment produces and sells sporting ammunition, reloading components, small caliber military ammunition and components, and industrial cartridges. The company was founded by Franklin W. Olin in 1892 and is headquartered in Clayton, MO.
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