On Wednesday, Morgan Stanley maintained its Equalweight rating on Avient Corp. (NYSE:AVNT), with a steady price target of $40.00. The firm's analysis followed Avient's disclosure of fourth-quarter EBITDA at $114 million, surpassing both Morgan Stanley's estimate of $110 million and the consensus of $112 million. Avient also provided first-quarter EPS guidance of $0.68, which is higher than the consensus of $0.58. The company's performance in the quarter was significantly attributed to its corporate segment, prompting interest in further details regarding the drivers behind the first-quarter guidance improvement.
Avient's guidance for 2024 EBITDA ranges from $505 million to $535 million, which is slightly below the consensus midpoint of $526 million. Notably, Avient did not offer sales guidance for the year. The company anticipates a continued uptick in demand within the packaging and consumer sectors for the first quarter, while expecting weaker demand in the transportation and building & construction sectors. Avient also projected the end of destocking in packaging and consumer areas, although this trend may not extend to other markets such as healthcare and telecommunications, where inventory reduction is ongoing.
During the upcoming earnings call, analysts are poised to seek clarity on the expected progression of demand throughout 2024, especially since Avient has not provided a quantitative sales forecast for the year. This information will be particularly important in light of the ongoing destocking and its potential impact on various end markets.
For 2024, Avient anticipates interest expenses between $105 million and $110 million, an effective tax rate of 23% to 25%, and capital expenditures of approximately $140 million. These financial estimates will be part of the discussions in the earnings call, where Avient is expected to elaborate on its financial outlook and operational strategies for the year ahead.
InvestingPro Insights
As Avient Corp. (NYSE:AVNT) navigates through a complex market environment, the company's latest financial metrics and analysts' insights provide a clearer picture of its current standing and future potential. According to InvestingPro data, Avient's market capitalization stands at $3.29 billion, with a P/E ratio of 5.52, indicating a potentially undervalued stock given its earnings. Despite a recent contraction in revenue growth, with a -5.84% change over the last twelve months as of Q3 2023, the company's gross profit margin remains robust at 30.04%, reflecting its ability to maintain profitability in challenging conditions.
InvestingPro Tips highlight that Avient has a notable track record of dividend reliability, having raised its dividend for 13 consecutive years and maintained payments for 14 consecutive years. This consistency is a reassuring sign for income-focused investors. Moreover, analysts predict that Avient will be profitable this year, with net income expected to grow, which may be a key driver behind the positive first-quarter EPS guidance that exceeded consensus estimates.
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