Olin provides update on 2Q17 expectations
On June 19, 2017, Olin (OLN) provided preliminary numbers for 2Q17 earnings. OLN expects to post adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $135.4 million as compared to $180.4 million in 2Q16, a decrease of 24.9% year-over-year. The decline in the expected adjusted EBITDA is primarily due to the extension of the turnaround period of its vinyl chloride monomer plant at the Freeport, Texas facility. Plus, the adjusted EBITDA was adversely impacted by the unplanned Bisphenol plant outage at its Freeport epoxy facility.
However, Olin reaffirmed its adjusted EBITDA guidance for fiscal 2017 to be at $1 billion, unchanged from the previous guidance.
Stock movement for previous week
The stock reacted negatively on the preliminary numbers provided by Olin. The stock closed at $28.26, a fall of 4.1% for the week. The decline in the stock price has resulted in the stock trading 8.5% below the 100-day moving average price of $30.90. However, OLN has returned 11.9% on a year-to-date basis. OLN’s RSI of 38 indicates that the stock is neither overbought nor oversold. An RSI of 70 and above indicates that the stock is overbought, while an RSI of 30 and below indicates that the stock is oversold. Analysts expect that OLN’s 12-month target price will be $35.36, an upside of 25.1% from the closing price as of June 23, 2017.
Investors can indirectly hold OLN by investing in the iShares U.S. Basic Materials ETF (IYM), which invests 0.8% of its portfolio in OLN. The top holdings of the fund include Dow Chemical (DOW), DuPont (DD), and Monsanto (MON) with weights of 12.2%, 11.9%, and 8.7%, respectively, as of June 23, 2017.