The Globe and Mail reports in its Saturday, April 4, edition that Desjardins Securities analyst David Newman sees the impact of COVID-19 putting chemicals "to the test." The Globe's David Leeder writes that on Thursday Chemtrade, citing "general economic uncertainty," suspended its 2020 earnings guidance. Mr. Newman said in a note: "Despite near-term chlorine (disinfectants) and sodium chlorate (bleached pulp for tissue, etc.) strength, the weakness in caustic soda and HCl could be magnified by potential downside in merchant and regen acid given slack industrial and refinery demand amid COVID-19. Water treatment chemicals should remain stable. We have lowered our estimates, despite the benefit of a weak Canadian dollar and a potential 2H20 caustic soda recovery." To reflect a "more subdued" outlook for the year, Mr. Newman lowered his 2020 earnings before interest, taxes, depreciation and amortization estimate to $280-million from $322-million before seeing a recovery in 2021. With a "hold" rating, Mr. Newman trimmed his share target to $7.50 from $11. Analysts on average target the shares at $7.67. Mr. Newman says, "Stay on the sidelines as CHE will be pressured by COVID-19 across a range of chemicals."
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