J.P. Morgan Upgrades Westlake Chemical Corp To Overweight

According to J.P. Morgan, Westlake Chemical WLK is upgraded to Overweight. J.P. Morgan said that Westlake is a smaller-capitalization version of LyondellBasell or of the commodity businesses of Dow Chemical. “It is therefore a smaller-capitalization means of investing in the strength of the petrochemical cycle over a 3-5 year period. We believe that Dow and LyondellBasell are likely to more than double their earnings and could more than double their share prices in a petrochemical up-cycle. We think Westlake falls into the same category. In fact, Westlake has roughly twice the per share leverage versus its larger capitalization comparables, measured by ethylene pounds per share. Westlake has roughly 45 ethylene pounds per share, LyondellBasell has 25, Dow is at 19, and Eastman is at 15. We believe that Westlake would earn in excess of $13 per share in a cyclical peak and that its share price could more than double from current levels.” Westlake Chemical closed yesterday at $57.10.