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Westlake Corp (NYSE:WLK) shares rebounded Monday after recent weakness, as investors looked past a softer third quarter and focused on company-led cost savings, acquisitions, and operational efficiencies expected to strengthen earnings in 2026.
The chemical maker’s upcoming productivity gains and plant rationalizations are seen laying the groundwork for a steadier recovery despite near-term market pressures.
Bank of America Securities analyst Matthew DeYoe upgraded Westlake to Buy from Neutral, stating that the recent share selloff following third-quarter results offers an attractive entry point.
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The brokerage trimmed its price forecast to $84 from $87. Analyst said third-quarter adjusted EBITDA of $333 million missed the $375 million consensus, reflecting market pressures in the engineered materials segment and a weaker mix in housing and infrastructure products.
Despite near-term softness, analysts see more noise than issue in the quarter and expect specific company initiatives to drive earnings recovery in 2026. He viewed the recent post-earnings selloff as overdone.
The analyst noted Westlake’s earnings have been under pressure since 2022 but outlined several drivers for improvement next year.
These include the expected closing of the ACI acquisition, forecast to add $45-50 million to EBITDA; cost savings of about $100 million from the closure of the Pernis epoxy facility; $50 million lower planned maintenance costs; and further productivity gains totaling up to $200 million in 2026.
In total, Bank of America sees up to $500 million in company-specific initiatives strengthening the growth base, though its forecast conservatively credits only $300 million.
The bank has revised its 2025 EBITDA estimate to $1.20 billion from $1.28 billion and its 2026 forecast to $1.55 billion from $1.61 billion, reflecting weaker housing and infrastructure product earnings.
Its price forecast fell to $84, based on a 9.5x multiple of 2026 estimated EBITDA, unchanged from prior methodology.
Bank of America now projects an adjusted loss of $1.13 per share in 2025 compared to a loss of 35 cents previously, followed by EPS of $1.00 in 2026 versus $1.75 prior estimate and $3.10 in 2027, down from $5.20 previous estimate.
Price Action: WLK shares were trading higher by 2.09% to $70.25 at last check Monday.
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Posted In: WLK
