Goldman Sachs Admits It Was Wrong About Huntsman Corp, But Still Likes Stock

In a report published Monday, Goldman Sachs analyst Robert Koort removed

from the Americas Conviction List, but maintained a Buy rating on the company with a price target of $26. Huntsman's shares had declined by 37 percent since June 2, 2014, when the company was added to the Conviction List. This compared with the 8 percent increase in the S&P 500 during the same period. Analyst Robert Koort mentioned that the company had been added to the Conviction List in view of the "substantial upside from earnings growth," synergies expected from the ROC TiO2 deal and an "attractive valuation." However, during this period, Huntsman's "already modest" forward EPS valuation multiple had plummeted from over 11x to less than 7x. Huntsman's current stock valuation did not reflect the true value of the company's portfolio and "an obvious catalyst to reversing the negative investor sentiment on HUN remains elusive," Koort added. In the report Goldman Sachs noted, "[W]e believe that investors remain overwhelmingly skeptical of the HUN value proposition, particularly in an environment that is cautious toward leveraged, global petrochemical and commodity companies." Koort believes that Huntsman was poised to record robust earnings growth in 2016, while generating strong free cash flows that could be used to strengthen its balance sheet and boost investor confidence. The report added, however, that the "validation of this view" was likely "several quarters away," which warranted the company's removal from the Conviction List.