Story updated at 9:50 a.m. to reflect market activity.
Shares of Huntsman gained 1.7% to $25.94 in morning trading.
The firm raised its price target for the chemical company to $32 from $24. Analysts John Roberts, Eldain Rodriguez, and Bill Carroll have greater confidence in accretion from the TiO2 deal and an improving portfolio mix and consistency.
"We upgrade HUN to Buy as we gain greater confidence that the accretive (~$0.40/sh in 2015E) acquisition of Rockwood's TiO2 and Additives businesses is likely to be approved now that HUN has offered concessions (we suspect in inks printing business) to the EU regulators," the analysts wrote. "In addition, we believe TiO2 prices have bottomed and valuation is attractive with the stock trading at 8.8x our PF2015E EPS and 6.0x PF2015E EV/EBITDA."
Separately, TheStreet Ratings team rates HUNTSMAN CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate HUNTSMAN CORP (HUN) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 202.5% when compared to the same quarter one year prior, rising from -$40.00 million to $41.00 million.
- HUN's revenue growth trails the industry average of 14.1%. Since the same quarter one year prior, revenues slightly increased by 3.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- HUNTSMAN CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HUNTSMAN CORP reported lower earnings of $0.54 versus $1.53 in the prior year. This year, the market expects an improvement in earnings ($2.13 versus $0.54).
- Currently the debt-to-equity ratio of 1.98 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with the unfavorable debt-to-equity ratio, HUN maintains a poor quick ratio of 0.97, which illustrates the inability to avoid short-term cash problems.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. In comparison to the other companies in the Chemicals industry and the overall market, HUNTSMAN CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full analysis from the report here: HUN Ratings Report