BofA Securities downgraded Westlake Chemical (NYSE: WLK) to Neutral from Buy, while setting a $115 price target (from $119).
The firm raised its first-quarter 2026 EBITDA estimate to $386 million from $357 million, reflecting a limited impact from the Iran conflict during the quarter, with more significant tailwinds expected in the second quarter.
For the full year 2026, BofA increased its EBITDA forecast by 38% to $2.322 billion from $1.681 billion, driven by stronger margins in polyolefins and polyvinyl chloride. However, this improvement was partially offset by weaker expectations for the building products segment, where margins are expected to face pressure from rising costs and volumes may decline due to higher interest rates and pricing.
Estimates for fiscal years 2027 and 2028 were also revised upward, though to a lesser extent—by 8% and 3%, respectively—as the firm expects pricing to normalize following elevated levels seen during the conflict.
While pricing is expected to remain above historical averages, BofA does not anticipate a return to peak levels observed during the conflict or currently projected for the remainder of 2026.
The firm’s valuation reflects an 8.0x EBITDA multiple, down from 10x previously, implying approximately 6.0x for Westlake’s commodity business—aligned with peers such as LyondellBasell—and 11x for its building products segment.
