JP Morgan Downgrades Orion's Rating to Underweight, PT to $9

JP Morgan Downgrades Orion's Rating to Underweight, PT to $9

JPMorgan Chase & Co. has downgraded Orion Engineered Carbons S.A. (NYSE: OEC) from Neutral to Underweight, reducing its price target from $10.00 to $9.00. The stock, currently trading at $10.53, has experienced a significant decline of -41.74% over the past year [1].

The downgrade reflects JPMorgan's expectation that rubber black pricing negotiations will conclude with flat to lower prices for 2026, potentially triggering negative share price reactions for carbon black companies. Orion Engineered Carbons, which holds a 9% market share with more than 900,000 tons in annual volume, faces volume challenges in its rubber black segment due to elevated tire imports from Asia into the Western Hemisphere [1].

Orion is also working through volume headwinds in its specialty black segment. The company is currently trading at 5.4x 2026E EV/EBITDA, approximately one multiple point below its peer Cabot (NYSE: CBT), a gap that JPMorgan considers reasonable with limited opportunity for Orion's trading multiples to expand [1].

In addition to the rating downgrade, Orion has announced several strategic moves. The company plans to discontinue production at three to five of its carbon black lines across facilities in the Americas and EMEA regions by the end of 2025. This decision is part of Orion's strategy to focus on higher-performing production lines. Orion will also distribute an interim dividend of $0.0207 per share in the fourth quarter of 2025, amounting to approximately $1.2 million. Furthermore, Chief Financial Officer Jeff Glajch is set to retire in early Q4 2025, with Orion initiating a search for his successor [1].

Meanwhile, Orion Properties Inc. (ONL) reported robust leasing activity and strategic asset sales in its second-quarter 2025 earnings. The company completed 639,000 square feet of leasing year-to-date, including 179,000 square feet in Q2, and sold four vacant properties for $26.9 million in the second quarter. Total revenues decreased to $37.3 million, core FFO declined to $11.5 million, and adjusted EBITDA dropped to $18.0 million. Orion maintains $257.7 million in liquidity [2].

Orion's stock has been under pressure, reaching a new 52-week low of $9.47 following a decline in stock price and trading volume. Several analysts have lowered their target price for Orion, with UBS reducing it from $18.00 to $17.00, Mizuho from $12.00 to $10.00, and JPMorgan from $18.00 to $12.00 [3].

References:
[1] https://www.investing.com/news/analyst-ratings/jpmorgan-downgrades-orion-engineered-carbons-stock-on-rubber-pricing-concerns-93CH-4181887
[2] https://www.ainvest.com/news/orion-properties-q2-2025-earnings-call-highlights-navigating-challenges-strategic-leasing-asset-sales-2508/
[3] https://www.marketbeat.com/instant-alerts/orion-nyseoec-reaches-new-12-month-low-heres-why-2025-08-01/