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Huntsman Corporation Now a Strong Sell on Weak Prospects

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Zacks Investment Research downgraded Huntsman Corporation (HUN - Free Report) to a Zacks Rank #5 (Strong Sell) on Sep 20, 2016. Going by the Zacks model, companies holding a Zacks Rank #5 have strong chances of underperforming the broader market over the next few quarters.

Why the Downgrade?

Market sentiments have been weak for Huntsman Corporation, with the company’s share price falling 6.7% since the release of second-quarter 2016 results on Jul 27. Though the company’s second-quarter earnings of 53 cents per share surpassed the Zacks Consensus Estimate by 1.9%, it came in below the year-ago tally of 63 cents. Revenues decreased 7.2% year over year.

Going forward, Huntsman Corporation predicts MTBE and ethylene margins to remain low, impacting the performances of its Polyurethanes and Performance Products segments, respectively. Tax rate is predicted to be 25−30% in 2016, higher than roughly 23% in the second quarter. Also, the company has long-term debt of $4.7 billion that might prove detrimental to the company’s profitability.

Bleak prospects have made investors doubtful regarding Huntsman Corporation’s performance in the quarters ahead. Over the last 60 days, the Zacks Consensus Estimate for the stock has decreased 32.1% to 38 cents for the third quarter, by 10% to $1.62 per share for 2016 and by 8.6% to $1.91 for 2017. Also, Huntsman Corporation has an Earnings ESP of -5.26% for the third quarter.

Price and Consensus

 

Price and Consensus | Quote

Stocks to Consider

Huntsman Corporation currently has a market capitalization of $3.5 billion. Better-ranked stocks in the chemical industry include Innophos Holdings Inc. , Innospec Inc. (IOSP - Free Report) and Mitsubishi Chemical Holdings Corporation (MTLHY - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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