We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Huntsman Gains on Downstream Expansion Amid Demand & Pricing Woes
Read MoreHide Full Article
Huntsman Corporation (HUN - Free Report) benefits from actions to grow its downstream businesses, differentiated product innovation, strategic acquisitions and cost actions amid headwinds from demand softness and pricing pressure.
HUN’s shares have lost 21.6% over a year compared with a 6% decline of its industry.
Image Source: Zacks Investment Research
Downstream Expansion & Cost Synergies Aid HUN
Huntsman, a Zacks Rank #3 (Hold) stock, 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, given 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.
The company should also 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 in year-over-year cost optimization benefits, excluding inflation, in 2024.
Demand & Pricing Headwinds Ail Huntsman Stock
Huntsman saw 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. MDI demand also 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, also affected 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 Zacks Consensus Estimate for NEM’s earnings has increased 16% in the past 60 days. The stock has rallied around 35% 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 while delivering in-line results on the other occasion. In this timeframe, it delivered an earnings surprise of around 3.8%, on average.
The Zacks Consensus Estimate for Eldorado Gold’s current year earnings is pegged at $1.35 per share, indicating a year-over-year rise of 136.8%. EGO beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 430.3%. The company's shares have rallied roughly 71% in the past year.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Huntsman Gains on Downstream Expansion Amid Demand & Pricing Woes
Huntsman Corporation (HUN - Free Report) benefits from actions to grow its downstream businesses, differentiated product innovation, strategic acquisitions and cost actions amid headwinds from demand softness and pricing pressure.
HUN’s shares have lost 21.6% over a year compared with a 6% decline of its industry.
Image Source: Zacks Investment Research
Downstream Expansion & Cost Synergies Aid HUN
Huntsman, a Zacks Rank #3 (Hold) stock, 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, given 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.
The company should also 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 in year-over-year cost optimization benefits, excluding inflation, in 2024.
Demand & Pricing Headwinds Ail Huntsman Stock
Huntsman saw 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. MDI demand also 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, also affected the Performance Products segment. Weaker prices are likely to continue to impact HUN’s results in the third quarter.
Stocks to Consider
Better-ranked stocks in the Basic Materials space are Newmont Corporation (NEM - Free Report) , Element Solutions Inc (ESI - Free Report) and Eldorado Gold Corporation (EGO - Free Report) , each sporting a Zacks Rank #1 (Strong 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 Zacks Consensus Estimate for NEM’s earnings has increased 16% in the past 60 days. The stock has rallied around 35% 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 while delivering in-line results on the other occasion. In this timeframe, it delivered an earnings surprise of around 3.8%, on average.
The Zacks Consensus Estimate for Eldorado Gold’s current year earnings is pegged at $1.35 per share, indicating a year-over-year rise of 136.8%. EGO beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 430.3%. The company's shares have rallied roughly 71% in the past year.