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Here's Why You Should Hold Onto Huntsman (HUN) Stock for Now
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Huntsman Corporation (HUN - Free Report) is expected to benefit from its investment in downstream businesses, differentiated product innovation, strategic acquisitions and cost actions amid headwinds from soft demand in certain markets and pricing pressure.
HUN’s shares have lost 23% over the past year compared with a 6.5% decline of its industry.
Image Source: Zacks Investment Research
Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
HUN Gains on Downstream Expansion & Cost Synergies
Huntsman remains focused on growing its downstream specialty and formulation businesses and is shifting its MDI (methylene diphenyl diisocyanate) business from components to differentiated systems that typically have higher margins and lower volatility.
HUN’s Polyurethanes segment is well positioned for a strong upside in the long term on the back of its focus on ramping up its high-value differentiated downstream portfolio. The substitution of MDI for less effective materials will remain a key driving factor for the MDI business.
Moreover, the company should gain from significant synergies of acquisitions. Its strong liquidity and balance sheet leverage give it adequate flexibility to continue to develop and expand its core businesses through acquisitions and internal investments. The acquisitions of CVC Thermoset and Gabriel Performance Products are contributing to EBITDA in the Advanced Materials segment.
HUN remains committed to its cost realignment and synergy objectives. It realized more than $280 million in run rate savings at the end of 2023. It sees additional cost-improvement opportunities in 2024, focusing on manufacturing cost efficiency and the completion of European restructuring activities. Huntsman expects roughly $60 million of in-year cost optimization benefits, excluding inflation, in 2024.
Demand & Pricing Headwinds Persist
Huntsman witnessed challenges from demand softness and significant de-stocking in 2023. Demand conditions in Europe weakened last year due to high levels of natural gas prices. Demand in China was impacted by reduced economic growth resulting from the pandemic-led restrictions and lower construction activities.
Although demand has improved of late in these regions, the lingering impacts of sluggish demand in certain markets are likely to continue in the near term. The residential construction market remains sluggish in China. Moreover, MDI demand remains weak in Europe due to elevated energy costs.
Huntsman also faces headwinds from pricing pressure. Lower selling prices across its segments weighed on its top line in the second quarter. A less favorable supply-demand environment contributed to the fall in MDI prices. Competitive pressures, particularly in Europe and the Americas, is also affecting the Performance Products segment. Weaker prices are likely to continue to impact HUN’s results in the third quarter.
The Zacks Consensus Estimate for Newmont’s current-year earnings is pegged at $2.82, indicating a rise of 75.2% from year-ago levels. The consensus estimate for NEM’s earnings has increased 16% in the past 60 days. The stock has rallied around 33% in the past year.
The consensus estimate for Element Solutions’ current-year earnings has increased by 0.7% in the past 60 days. ESI beat the consensus estimate in three of the last four quarters. In this timeframe, it delivered an earnings surprise of around 3.8%, on average.
The Zacks Consensus Estimate for Agnico Eagle’s current-year earnings is pegged at $3.65, indicating a year-over-year rise of 63.7%. AEM’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average earnings surprise being 15.7%. The company’s shares have rallied roughly 75% in the past year.
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Here's Why You Should Hold Onto Huntsman (HUN) Stock for Now
Huntsman Corporation (HUN - Free Report) is expected to benefit from its investment in downstream businesses, differentiated product innovation, strategic acquisitions and cost actions amid headwinds from soft demand in certain markets and pricing pressure.
HUN’s shares have lost 23% over the past year compared with a 6.5% decline of its industry.
Image Source: Zacks Investment Research
Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
HUN Gains on Downstream Expansion & Cost Synergies
Huntsman remains focused on growing its downstream specialty and formulation businesses and is shifting its MDI (methylene diphenyl diisocyanate) business from components to differentiated systems that typically have higher margins and lower volatility.
HUN’s Polyurethanes segment is well positioned for a strong upside in the long term on the back of its focus on ramping up its high-value differentiated downstream portfolio. The substitution of MDI for less effective materials will remain a key driving factor for the MDI business.
Moreover, the company should gain from significant synergies of acquisitions. Its strong liquidity and balance sheet leverage give it adequate flexibility to continue to develop and expand its core businesses through acquisitions and internal investments. The acquisitions of CVC Thermoset and Gabriel Performance Products are contributing to EBITDA in the Advanced Materials segment.
HUN remains committed to its cost realignment and synergy objectives. It realized more than $280 million in run rate savings at the end of 2023. It sees additional cost-improvement opportunities in 2024, focusing on manufacturing cost efficiency and the completion of European restructuring activities. Huntsman expects roughly $60 million of in-year cost optimization benefits, excluding inflation, in 2024.
Demand & Pricing Headwinds Persist
Huntsman witnessed challenges from demand softness and significant de-stocking in 2023. Demand conditions in Europe weakened last year due to high levels of natural gas prices. Demand in China was impacted by reduced economic growth resulting from the pandemic-led restrictions and lower construction activities.
Although demand has improved of late in these regions, the lingering impacts of sluggish demand in certain markets are likely to continue in the near term. The residential construction market remains sluggish in China. Moreover, MDI demand remains weak in Europe due to elevated energy costs.
Huntsman also faces headwinds from pricing pressure. Lower selling prices across its segments weighed on its top line in the second quarter. A less favorable supply-demand environment contributed to the fall in MDI prices. Competitive pressures, particularly in Europe and the Americas, is also affecting the Performance Products segment. Weaker prices are likely to continue to impact HUN’s results in the third quarter.
Huntsman Corporation Price and Consensus
Huntsman Corporation price-consensus-chart | Huntsman Corporation Quote
Stocks to Consider
Some better-ranked stocks in the Basic Materials space are Newmont Corporation (NEM - Free Report) , Element Solutions Inc (ESI - Free Report) and Agnico Eagle Mines Limited (AEM - Free Report) . Newmont and Element Solutions sport a Zacks Rank #1 (Strong Buy), and Agnico Eagle carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Newmont’s current-year earnings is pegged at $2.82, indicating a rise of 75.2% from year-ago levels. The consensus estimate for NEM’s earnings has increased 16% in the past 60 days. The stock has rallied around 33% in the past year.
The consensus estimate for Element Solutions’ current-year earnings has increased by 0.7% in the past 60 days. ESI beat the consensus estimate in three of the last four quarters. In this timeframe, it delivered an earnings surprise of around 3.8%, on average.
The Zacks Consensus Estimate for Agnico Eagle’s current-year earnings is pegged at $3.65, indicating a year-over-year rise of 63.7%. AEM’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average earnings surprise being 15.7%. The company’s shares have rallied roughly 75% in the past year.