On Monday, KeyBanc Capital Markets adjusted its outlook on shares of Ecovyst Inc. (NYSE: ECVT), reducing the price target to $10.00 from the previous $13.00, while keeping an Overweight rating on the stock. The firm's analyst cited a significant surprise in the company's revised EBITDA forecast for 2024, despite a generally weak macroeconomic forecast for the second half of the year.
Ecovyst's renewable diesel segment, which has been one of its fastest-growing businesses, experienced a setback that has impacted investor confidence. This comes amid a broader trend of caution in demand across industrial markets, in line with other chemical sector companies as they face the second half of the year.
The analyst noted that the decrease in renewable fuels demand observed in the second quarter is expected to continue for the next 12-18 months, raising flags for potential concerns in the industry. Despite the challenging outlook for 2024, KeyBanc anticipates a recovery in industrial demand by 2025.
KeyBanc's long-term outlook for Ecovyst remains positive, with expectations for growth drivers such as advanced recycling and sustainable aviation fuels to contribute to the company's expansion in 2025 and beyond. The revised price target reflects a more conservative earnings forecast, taking into account the current challenges faced by the company.
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