Shares of Olin Corporation (NYSE:OLN), 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.
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.
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.
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.