Mizuho on Tuesday raised its price target for Orion Engineered Carbons S.A. (NYSE:OEC) to $5.25 from $4.50, while leaving its stock rating at Underperform. The firm said higher market multiples underpinned the upward revision of the target, but it did not alter its negative view on the stock.
Orion shares were trading at $5.74, within a 52-week trading band of $4.34 to $16.63. InvestingPro Fair Value measures suggest the stock remains undervalued relative to those metrics.
For fiscal 2026, the company provided guidance for adjusted EBITDA with a midpoint of $180 million and a range of $160 million to $200 million. Those figures compare with consensus estimates of $230 million and $227 million, respectively, leaving the company’s outlook notably below analyst expectations. Management flagged ongoing headwinds in its rubber blacks business, driven by tire imports into Western markets.
Orion reported fourth-quarter 2025 adjusted EBITDA of $55 million, a 10% decline year-over-year that accompanied a 3.8% drop in volumes. The reported EBITDA outperformed consensus expectations of $34 million and $33 million. Despite the EBITDA beat, gross profit per ton fell 9.6% year-over-year to $354 per ton.
InvestingPro data indicates the company sustains a robust free cash flow yield of 17%, reflecting cash generation even amid recent operational pressure.
Looking at the near term, Orion expects first-half 2026 EBITDA to land between $90 million and $110 million, a forecast derived from historical seasonal patterns. That guidance is premised on continued weakness in tire import trends and assumes no recovery from what the company describes as a trough in the freight industry.
Capital spending came down from $207 million in 2024 to $161 million in 2025. Management now targets $90 million in capital expenditures for 2026 as growth-related spending is curtailed.
In its fourth-quarter 2025 earnings release the company posted an earnings per share (EPS) of -$0.34, missing expectations of -$0.06. The shortfall represents a -466.67% discrepancy versus the anticipated EPS. Revenues, however, beat forecasts, coming in at $411.7 million against an expected $367.01 million, a 12.18% upside. The revenue beat underscores the company’s ability to achieve higher sales levels despite an EPS miss.
The earnings announcement and guidance did not include discussion of analyst opinions or notable stock movement commentary during the quarter’s release. As investors parse the mixed set of results, attention is likely to remain on the company’s forthcoming guidance and strategic adjustments in response to market pressures.
Summary
Mizuho raised its price target on Orion Engineered Carbons to $5.25 but kept an Underperform rating, citing elevated market multiples for the target change. Orion’s fiscal 2026 adjusted EBITDA guidance is below consensus, while Q4 2025 results showed an EBITDA beat but declining margins per ton and an EPS miss. The company cut planned capital spending for 2026 to $90 million.
Key Points
- Mizuho lifted the price target to $5.25 from $4.50 and retained an Underperform rating due to valuation dynamics.
- Fiscal 2026 adjusted EBITDA guidance midpoint is $180 million (range $160 million to $200 million), below consensus of $230 million and $227 million.
- Q4 2025 adjusted EBITDA of $55 million beat expectations, while gross profit per ton fell to $354 and EPS missed at -$0.34 versus -$0.06 expected.
Risks and Uncertainties
- Continued pressure in rubber blacks from tire imports into Western markets could suppress margins and volumes - this affects the materials and tire-supply sectors.
- Freight industry weakness is assumed to persist in guidance; a prolonged trough in freight would weigh on near-term EBITDA - this impacts logistics and commodity supply chains.
- Lower-than-expected recovery in demand could exacerbate the gap between company guidance and consensus forecasts, influencing investor sentiment in materials and specialty chemicals markets.