Story updated at 9:45 a.m. to reflect market activity.
Westlake Chemical gained 1.8% to $134.65 in morning trading.
The bank raised its price target for the chemical company to $149 from $140.
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Analyst Jeffrey J. Zakauskas said, "The valuations of the North American petrochemical companies continue to climb because the companies have been characterized by consistently high financial returns over a multi-year period. Increases in domestic shale-based natural gas production, in the context of Brent prices in excess of $100/bbl, are the source of the strength."
Separately, TheStreet Ratings team rates WESTLAKE CHEMICAL CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate WESTLAKE CHEMICAL CORP (WLK) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- WLK's revenue growth has slightly outpaced the industry average of 13.1%. Since the same quarter one year prior, revenues rose by 18.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.32, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 2.79, which clearly demonstrates the ability to cover short-term cash needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Chemicals industry and the overall market, WESTLAKE CHEMICAL CORP's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- Powered by its strong earnings growth of 78.87% and other important driving factors, this stock has surged by 51.05% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, WLK should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- WESTLAKE CHEMICAL CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, WESTLAKE CHEMICAL CORP increased its bottom line by earning $9.09 versus $5.75 in the prior year. This year, the market expects an improvement in earnings ($10.05 versus $9.09).
- You can view the full analysis from the report here: WLK Ratings Report