Here's Why You Should Add Huntsman (HUN) to Your Portfolio

Zacks Equity Research

Tue, Jul 13, 2021, 4:39 AM 3 min read

Huntsman Corporation HUN is gaining from actions to grow its downstream businesses and synergies of acquisitions. We are positive on the company’s prospects and believe that the time is right for you to add the stock to the portfolio as it looks promising and is poised to carry the momentum ahead.

Let's see what makes this chemical maker an intriguing investment option at the moment.

Price Performance

Huntsman’s shares have shot up 46.4% over the past year, outperforming its industry’s rise of 38.4% over the same time frame. It has also topped the S&P 500’s roughly 37.2% rise over the same period.

Image Source: Zacks Investment Research

Estimates Northbound

Over the past two months, the Zacks Consensus Estimate for Huntsman for 2021 has increased around 2.6%. The consensus estimate for 2022 has also been revised 2.7% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.

Positive Earnings Surprise History

Huntsman has outpaced the Zacks Consensus Estimate in each of the trailing four quarters. In this time frame, it has delivered an earnings surprise of 21.4%, on average.

Growth Drivers in Place

Huntsman benefits from its investment in downstream businesses and differentiated product innovation. The company remains focused on growing its downstream specialty and formulation businesses and is shifting its MDI (methylene diphenyl diisocyanate) business from components to differentiated systems that typically have higher margins and lower volatility.

The Polyurethanes segment is well positioned for strong upside in the long term on the back of the company’s focus on ramping up its high-value differentiated downstream portfolio. Substitution of MDI for less effective materials will remain a key driving factor for the MDI business.

Huntsman should also gain from significant synergies of acquisitions. Its strong liquidity and balance sheet leverage gives it adequate flexibility to continue to develop and expand its core businesses through acquisitions and internal investments.

The company expects to deliver more than $120 million of annualized savings and acquisition integration synergies by mid-2023. It achieved $27 million of targeted annualized savings in 2020.

Huntsman expects the CVC Thermoset acquisition to deliver run-rate synergies of roughly $15 million by the end of this year. The recently acquired Gabriel Performance Products is also expected to provide around $8 million of synergies by early 2023.