Westlake's (WLK) earnings and valuation are nearing a low point, creating an "attractive" investment opportunity before potential positive changes in macroeconomic data later this year, UBS Securities said in a note emailed Friday.
Global utilization rates for polyvinyl chloride and caustic, Westlake's main products, reached bottom in 2024 and are expected to gradually improve, UBS said.
"We see [Westlake's] key commodity products, PVC and caustic, as better positioned due to a lower rate of capacity additions and more near-term inflections in utilization rates," the firm said in the note.
The company's housing and infrastructure segment, which has outpaced peers, is expected to see "more meaningful growth" into 2026/2027 driven by a recovery in the US housing market, and, along with strategic investments and an improved performance and essential materials segment, lead to a projected 22% earnings per share annual growth over the next four years, UBS said.
UBS upgraded Westlake stock to buy from neutral and maintained its price target of $144.
Price: 110.06, Change: -0.48, Percent Change: -0.44
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