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Westlake's PEM Earnings at Trough, Gradual Recovery Expected in 2025, RBC Says
2024-08-23 21:28
09:28 AM EDT, 08/23/2024 (MT Newswires) -- Westlake (WLK) is at a low point in its performance and essential materials, or PEM, earnings cycle, but a gradual recovery is expected in 2025, driven by improved caustic earnings and better demand trends, RBC said in a note Friday.
"[Westlake] is seeing weak market conditions across chlorovinyls, with slower demand growth post-COVID in Asia" and rising raw material costs could be headwinds, RBC said in the note.
RBC said it expects potential future rate cuts to boost demand in the building and construction, or B&C, aiding both PEM and housing and infrastructure products, or HIP, segments.
"HIP could accelerate outperformance from rate cuts. Currently, HIP is benefiting from low input costs from PEM," RBC said.
RBC upgraded Westlake's stock to outperform from sector perform and lifted the price target to $174 from $157.
Price: 146.50, Change: +1.92, Percent Change: +1.33
