UPDATE: Dahlman Rose Initiates Olin Corporation (NYSE: OLN) at Hold; Upside Delayed by Diversification

Dahlman Rose initiated coverage on Olin Corporation OLN with a Hold rating. Dahlman Rose said, "OLN is using a combination of cost cutting and bolt-on acquisitions to improve profitability. While helpful, we believe the shares will be challenged to outperform without a lift from the chlorine market. … While we see ECU (an ECU is the combined price of 1 ton of chlorine and 1.1 tons of caustic soda) values at fairly high levels today, the bulk of the heavy lifting is being done by caustic soda. However, OLN is a merchant ECU seller (sells both chlorine and caustic soda). As such, caustic's outsized contribution actually highlights a constrained chlorine market. For sizable earnings growth, we believe that OLN's annual operating rate needs to move beyond 85% to drive chlorine prices and ECU values higher. We do not see this occurring in 2013." Olin Corporation closed at $22.41 on Wednesday.