On Thursday, LSB Industries (NYSE:LXU) experienced a downgrade in its stock rating from Neutral to Underweight by Piper Sandler, with a new stock price target set to $8.00, a decrease from the previous $11.50.
The firm cited concerns over limited upside for the company's key products due to lower grain pricing, which is anticipated to affect earnings.
The downgrade comes ahead of the company's earnings report scheduled for March 5, 2024. Piper Sandler expects that LSB Industries will face similar challenges to its peers, with weak nutrient pricing likely to impact earnings negatively. The new price target reflects these anticipated challenges in the agricultural sector.
The valuation of the new price target is based on a multiple of 6.4 times the enterprise value to forecasted FY25 EBITDA, which remains unchanged. The firm's analysis assumes an EBITDA of $136 million, net debt of $260 million, and a share count of 76 million.
The reevaluation of LSB Industries' financial outlook aligns with the broader market trend of adjusting expectations in response to fluctuating commodity prices.
Investors are now looking forward to the upcoming earnings report to gauge the company's financial health and performance amidst the current market conditions. The revised price target of $8.00 is set with a view of the company's expected financial performance over the next fiscal year.
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