Huntsman's Target Valuation Multiple Should Be Higher, Says This Analyst

Huntsman's Target Valuation Multiple Should Be Higher, Says This Analyst
  • RBC Capital analyst Arun Viswanathan raised the price target for Huntsman Corp HUN to $43 (an upside of 45%) from $39 while maintaining the Outperform rating on the shares.
  • With the sale of its underperforming textile business, the analyst believes HUN's target valuation multiple should be higher.
  • The company recently entered into a definitive agreement to sell its Textile Effects division to Archroma, a portfolio company of SK Capital Partners, for $718 million. The transaction is expected to close in 1H23.
  • Viswanathan says that given the stock's weak reaction to this news, he believes investors continue to be worried about recession impacts on construction and MDI demand.
  • The analyst argues that HUN will enter this recession with more cash, and every 0.5x EBITDA adds ~$3-4 to the stock.
  • Price Action: HUN shares closed higher by 2.20% at $29.71 on Thursday.

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