Axiall Shares Upgraded To Outperform At Cowen, Sees Increased Bid

Cowen’s Charles Neivert upgraded the rating for Axiall Corp AXLL from Market Perform to Outperform, while raising the price target from $17 to $25 on expectations of an increase in the bid by Westlake Chemical Corporation WLK.

Analyst Charles Neivert believes that Axiall, excluding its building products business, could bring additional bidder interest due to its “pure play status.”

No Rebound In Vinyl Market Expected

There vinyl market is unlikely to rebound in the next few months. Neivert added that the PVC and Caustic Market issues outweighed raw material benefits prior to the unsolicited bid by Westlake and the increase in Axiall’s shares in January.

Even an improvement in the market environment, driven by industry fundamentals, is unlikely to be enough to trigger a strong margin recovery at Axiall. “However, previously contemplated (and partly executed) company action along with the WLK bid and subsequent actions to nominate a new board, change the dynamic significantly,” Neivert added.

The analyst believes that Axiall’s FY17 earnings are set to increase by $0.54 in case of a $25 per share offer and by $0.45 in case of a $30 per share offer, assuming annual synergies of $60 million. These calculations are based on the assumptions of core Building Products and the Lotte ethylene JV being retained in their current form.