Mizuho has downgraded Westlake Chemical (NYSE:WLK) from Outperform to Neutral while holding a $88.00 price target, citing a softer outlook for the company’s core product lines despite recent share strength.
The analyst action follows Westlake’s negative pre-announcement for the December quarter of 2025 and comes amid weak March quarter guidance from peer Olin. Mizuho’s review singled out deterioration in Westlake’s chloralkali-vinyls and polyethylene operations as underlying reasons for the more cautious stance.
Shares of Westlake are trading at $95.93, notably above Mizuho’s target. The research team highlighted that the stock has rallied roughly 60% from its November 2025 low on hopes of recovery, leaving the share price about 9% higher than the firm’s $88.00 target.
Data cited by Mizuho show mixed performance metrics. Year-to-date returns for WLK stand at 29.74%, while gross profit margins are reported at 9.18% - a level the analyst team described as weak and a potential contributor to the company’s challenges. Over the last twelve months, Westlake recorded a basic EPS of -$7.42.
Despite those pressures, Mizuho noted attributes that could have supported resilience: roughly 80% of Westlake’s production is located in the natural gas-advantaged U.S. region and the company maintains one of the stronger balance sheets in its sector. Even so, the firm expressed disappointment that Westlake has not shown the expected durability in the current environment.
The research house maintained its $88.00 price target and left its underlying estimates unchanged. It also flagged that its 2027 earnings-per-share estimate for Westlake sits near the lowest level observed since 2008, even though the company holds among the higher percentages of assets in specialty chemicals within its portfolio - a business that remains a minority of overall operations.
Mizuho’s decision to lower the stock’s rating to Neutral reflects the combination of disappointing near-term results, peer weakness in the March quarter, and continued margin pressure, set against a backdrop of an outsized stock rally. Investors face a valuation disconnect given the share price’s outperformance versus the firm’s target and the company’s recent profitability metrics.
Data points cited:
- New rating: Outperform to Neutral
- Price target: $88.00 (maintained)
- Current share price: $95.93
- Rally from November 2025 low: ~60%
- Premium to target: ~9%
- Year-to-date return: 29.74%
- Gross profit margin: 9.18%
- Last twelve months basic EPS: -$7.42
- Production in U.S. natural gas-advantaged region: ~80%