Why the Consensus Target Price for Westlake Chemical Is Changing
Analysts’ consensus on Westlake Chemical
Westlake Chemical (WLK) is getting the attention of analysts, and the number of analysts covering the stock has been on an upward trend. In the past year, the number has gone from 13 to 17 as of December 4, 2017. About 71% of them have recommended a “buy” for the stock, and 24% have recommended a “hold.” About 5% have recommended a “sell.”
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The analysts’ consensus on Westlake Chemical suggests a target price of $99.80, which implies a return potential of 2.7% over the closing price of $97.19 on December 4, 2017. Since September, the analysts’ consensus target price has risen significantly from $76.29 to $99.80, which indicates a bullish view.
Analysts say ‘buy’
Westlake Chemical posted strong 3Q17 earnings and sales supported by the Axiall acquisition and price increases on its major products. That trend is expected to continue in the next quarter as well. Westlake has also raised new bonds at a lower coupon rate, which will be used to repay the notes that carried higher coupon rates. The company thus expects its interest expense to decline further. WLK has also increased its quarterly cash dividend, which could explain why analysts are recommending a “buy” for the stock.
Individual analysts’ views and target prices
- JPMorgan Chase (JPM) has recommended a target price of $104 for WLK, which implies a potential return of 7% over the closing price of $97.19 on December 4, 2017.
- The Royal Bank of Canada (RY) has rated WLK an “outperform” and recommends a target price of $114, which implies a return potential of 17.3% over the closing price on December 4, 2017.
- SunTrust Robinson Humphrey has recommended a target price of $102 for Westlake Chemical, which implies a potential return of 4.9% from the closing price of $97.19 on December 4, 2017.
Investors looking for exposure to Westlake Chemical can invest in the iShares US Basic Materials (IYM), which has invested 0.3% of its portfolio in the company. The fund also provides exposure to DowDuPont (DWDP), Monsanto (MON), and Praxair (PX), which have weights of 24.6%, 7%, and 4.9%, respectively, as of December 4, 2017.