Please ensure Javascript is enabled for purposes of website accessibility

Why Olin Stock Rallied as Much as 11% in Morning Trading Today

By Reuben Gregg Brewer - Updated Mar 18, 2021 at 11:47AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of the specialty chemicals company got a boost from Wall Street as analysts digested a recent business update.

What happened

Shares of Olin Corporation (OLN 0.90%), a maker of specialty chemicals, jumped as much as 11% in the first hour of trading on March 18. The price jump today, however, actually traces back to Winter Storm Uri, which disrupted the company's business. Here's a quick timeline that helps explain why investors were in a buying mood today.

So what

Earlier in the year Texas was hit with a massive winter storm, called Uri, which caused widespread power outages and disruption. All of Olin's operations in Freeport, Texas, were impacted, with the hit spreading to its businesses in Louisiana, Mississippi, and Alabama. The company "declared Force Majeure on all chemical product shipments from North America." That's not good news. However, the company has hedges in place to protect it from wild swings in energy costs. In fact, on March 16 it announced that it was increasing its first-quarter adjusted EBITDA projections from a range of $400 million to $425 million to a range of $475 million to $500 million. This is likely to be a one-time benefit, but it looks like the company's contingency plans paid off.  

Two people looking at a computer with a stock graph on the screen.

Image source: Getty Images.

That, however, was news from a couple of days ago. Since then, Wall Street analysts have reevaluated the stock. On the day of the update, a Stifel analyst increased the price target on the stock from $35 per share to $46 while maintaining a buy rating on the shares. The next day Wells Fargo increased its price target from $39 to $50, maintaining an overweight rating. And today Barclays increased its price target from $30 to $43 and Tudor Pickering moved the stock from a hold to a buy, with a $47 price target. Investors tend to like it when analysts upgrade a stock, especially when there are a lot of upgrades in a short period of time, so it isn't shocking that Olin's shares are on the rise today.  

Now what

While shares of Olin got a quick boost this morning, the shares have rallied strongly since Olin's business update just a couple of days ago. So a lot of good news has already been priced in here. In fact, by 11 a.m. EDT, the gain had been pared to around 7%. Still, the stock is up a hefty 20% or so since March 15, the day before its update, so long-term investors can't complain too much if the stock doesn't hold on to all of its early gains today.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Olin Corporation Stock Quote
Olin Corporation
OLN
$63.11 (0.90%) $0.56

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/23/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.