JPMorgan has revised its stance on Huntsman Corporation, downgrading the stock to Neutral from Overweight even as it lifted its price target to $14.00 from $11.00. The change reflects the bank’s view that Huntsman’s equity valuation already incorporates a sizable share of a potential cyclical earnings recovery.
Valuation and JPMorgan estimates
Analyst Jeffrey Zekauskas noted that, on JPMorgan’s numbers, Huntsman is trading at about 13 times estimated EBITDA for 2026 and roughly 10 times estimated EBITDA for 2027. Those multiples sit alongside projected free cash flow yields of 2% for 2026 and 5% for 2027, according to the firm.
The bank contrasted these forward multiples with Huntsman’s historical trading levels, which it said are nearer to 7.5 times current-year EBITDA and 6.5 times year-ahead EBITDA. Using those historical multiples, the stock would imply EBITDA of approximately $520 million for 2026 and about $600 million for 2027, JPMorgan calculated.
By contrast, JPMorgan’s own EBITDA estimates for Huntsman are $311 million in 2026 and $382 million in 2027. The firm characterized the present valuation as at least fair given those forecasted earnings.
Potential upside and limits
JPMorgan acknowledged that Huntsman could achieve higher earnings in the event of a prolonged housing recovery. The firm noted that the company’s 10-year average EBITDA is near $900 million, but added that this historical average understates the impact of divestitures and the effects of heightened industry competition.
Recent operating performance
Huntsman’s most recent quarterly report showed an adjusted loss of $0.37 per share, wider than the anticipated adjusted loss of $0.33 per share. Revenue of $1.36 billion modestly exceeded the consensus forecast of $1.34 billion, but represented a 7% decline from the $1.45 billion recorded in the same quarter a year earlier. Adjusted EBITDA fell sharply to $35 million from $71 million in the prior-year quarter, reflecting continuing industry headwinds.
Implications
JPMorgan’s downgrade alongside a higher price target signals that the firm views current share prices as compensating for a portion of cyclical recovery potential, while its internal earnings forecasts remain well below the historical average and the levels implied by past trading multiples.
Key points
- JPMorgan cut Huntsman’s rating to Neutral from Overweight and raised its price target to $14.00 from $11.00.
- The stock trades at about 13x estimated EBITDA for 2026 and 10x for 2027, with free cash flow yields of 2% and 5%, respectively.
- Recent results showed an adjusted loss of $0.37 per share, revenue of $1.36 billion, and adjusted EBITDA of $35 million.
Risks and uncertainties
- Valuation risk - Current market multiples imply a partial recovery that JPMorgan’s EBITDA projections do not support, creating risk if earnings fall short of those implied levels.
- Cyclical exposure - Huntsman’s earnings sensitivity to housing and other cyclical end markets could limit near-term upside if a prolonged recovery does not materialize.
- Competitive and structural changes - Historical average EBITDA may overstate recoverable earnings because of divestitures and increased industry competition.