Wells Fargo Cools on Huntsman: What Investors Need to Know as Price Target Drops

The chemical sector’s volatility has come into sharp focus as Huntsman Corporation (HUN), a global leader in differentiated and specialty chemicals, receives a notable downgrade from top Wall Street firm Wells Fargo. The move, which shifts Huntsman from "Overweight" to "Equal Weight" with a $13 price target, lands at a time when the company’s shares are hovering near multi-year lows. For self-directed investors, understanding the implications of this analyst action—against a backdrop of weak technicals, sector challenges, and recent corporate news—is critical for informed portfolio positioning.

Key Takeaways:

• Potential Upside: The new Wells Fargo price target of $13 implies a 9.8% upside from the current price of $11.84.

• Downgrade Context: The downgrade from "Overweight" to "Equal Weight" signals diminished near-term conviction despite the modest upside.

• Stock Under Pressure: HUN is trading near its 52-week low, with an RSI of 27.5 indicating potential oversold conditions.

• Recent News: Q1 earnings disappointed relative to Street expectations, and a significant leadership transition is underway in the Polyurethanes division.

• Technical Signals: Both 20-day EMA and SMA are above the current price, and HUN has experienced more down days than up days in the past year.

The Downgrade: Analyst Confidence in Question

Wells Fargo, a heavyweight among U.S. financial institutions with deep coverage across chemicals and industrials, has downgraded Huntsman to "Equal Weight". This move comes as the firm re-evaluates risk/reward in an environment marked by global demand softness and margin compression across the sector.

Wells Fargo’s coverage in chemicals is recognized for its data-driven approach and sector expertise. Their downgrade, especially when paired with a price target that still sits above market, suggests a nuanced view: management execution and cost controls are seen as positives, but cyclical pressures and lack of near-term catalysts cap conviction. In effect, this is a vote for sector neutrality rather than an outright bearish call.

"We see limited near-term catalysts for multiple expansion. While cost discipline is evident, persistent demand headwinds warrant a more cautious stance."
— Wells Fargo Chemicals Team (May 2025)

HUN’s Business Model: Specialized, But Not Immune

Huntsman operates in four major segments: Polyurethanes, Performance Products, Advanced Materials, and Textile Effects. Its global footprint and focus on high-value chemicals for construction, automotive, and consumer products have historically provided a degree of insulation from commodity price swings. However, the last twelve months have shown even specialty players aren’t immune to macro shocks, as customers destock and end-market demand falters.

Recent news of Tony Hankins retiring as President of Polyurethanes (with Steen Weien Hansen stepping in) underscores a period of change at the executive level, adding another variable for investors to digest.

Financial Pulse: What the Numbers Reveal

• Stock Performance: HUN has declined over 23% in the past year, closing recently at $11.84—just above its 52-week low of $10. The highest price in the last year was $25.78, pointing to major value destruction.

• Technical Indicators: The 20-day EMA ($13.38) and SMA ($13.12) sit above the current price, while the RSI at 27.5 is notably oversold. HUN has logged 143 down days versus 103 up days in the past year, with an average daily trade count of 22,586—a sign of persistent negative sentiment.

• Volume Trends: The lowest daily volume was just 10,326 shares; the highest surged past 9.4 million, suggesting periodic liquidity spikes perhaps tied to earnings or news.

Earnings and Newsflow: Caution Flags

Recent quarterly results missed expectations on both revenue and EPS, as covered in Zacks. Management cited ongoing weak demand and industrial sluggishness. The leadership transition in Polyurethanes, highlighted by PR Newswire, adds a layer of uncertainty—though incoming president Hansen brings relevant experience.

Expert Insight

"Although the revenue and EPS for Huntsman (HUN) give a sense of how its business performed in the quarter ended March 2025, it might be worth considering how some key metrics compare with Wall Street estimates and the year-ago numbers."
— Zacks Investment Research (May 2025)

Is the 10% Upside a Trap?

With the stock at $11.84 and a price target of $13, the implied upside is just under 10%. For a name that has lost more than half its value in a year and is trading in oversold territory, this could tempt contrarians. However, investors must weigh this against:

• Ongoing sector headwinds (global demand softness, margin pressure)

• Disappointing recent earnings

• Leadership transition risk

• Technical signals pointing to continued caution

Sector Context: Chemicals Under Pressure

The entire chemicals sector has struggled with demand uncertainty, global trade friction, and input cost volatility. Most peers have seen similar or worse drawdowns, and analyst sentiment has moderated across the board. Wells Fargo’s downgrade of Huntsman is thus not an outlier, but rather a reflection of broader industry reality.

What to Watch Going Forward

• Execution by New Leadership: How quickly and effectively Steen Weien Hansen can stabilize the Polyurethanes division.

• Demand Recovery: Any green shoots in end-markets, especially construction and automotive, could support a rebound.

• Potential for Oversold Rally: With RSI below 30 and the stock near 52-week lows, a short-term technical bounce is possible if macro news improves.

• Further Analyst Moves: Watch for other firms echoing Wells Fargo or taking a divergent stance.

Bottom Line: A Downgrade That Signals More Than It Says

Wells Fargo’s downgrade of Huntsman to "Equal Weight" is a clear signal that, while the stock’s collapse has created modest upside potential, sector realities and recent disappointments outweigh near-term optimism. Sophisticated investors should see this as a call for caution: the risk/reward is now more balanced, and further downside cannot be ruled out unless demand recovers or management delivers significant execution wins.

For those seeking deep value, patience and close monitoring of sector data and company execution are recommended before making a move. The next few quarters—and Hansen’s early days as division president—will be pivotal in determining whether Huntsman’s bottom really is in, or if more pain lies ahead.