Hold Rating for Westlake Chemical Amid Weakened Short-Term Fundamentals and Challenging Commodity Backdrop

BMO Capital analyst Bhavesh Lodaya has maintained their neutral stance on WLK stock, giving a Hold rating yesterday.

Bhavesh Lodaya’s rating is based on a combination of factors impacting Westlake Chemical’s performance. Despite the company’s strong balance sheet and robust HIP platform, the short-term fundamentals for its PEM platform have weakened significantly compared to previous expectations. This has led to a downward adjustment in the financial forecasts for the fiscal years 2025 and 2026.
The challenging commodity backdrop, particularly in the polyethylene segment, has been a significant factor. Trade uncertainties and reduced consumer spending have weakened U.S. polyethylene dynamics, resulting in lower operating rates and export volumes. Additionally, while there is some positive pricing in the chlor-alkali segment, the overall macroeconomic environment remains uncertain, leading to a balanced risk/reward scenario that supports the Hold rating.

In another report released yesterday, Wells Fargo also downgraded the stock to a Hold with a $76.00 price target.