Materials
WLK posted a nice 1Q upside though 2024 consensus barely moved; likely a function of its inherent conservatism (Fermium stands 8% higher than consensus). Over the last few years, it has deemphasized the commodity side of the portfolio and materially added to its more specialty B&C products, which peers trade at higher multiples. An upcoming investor event focused on this side of the portfolio may serve to establish more credibility on the sustainability of these results. It's modestly contrarian with only 30% of sell-side at BUY, and lastly, management is considered among the industry’s best.
Technology Trends: Change, disruption and opportunity in 2022
1) The acceleration from legacy security solutions to the newer generation of solutions - SASE / shake-up of enterprise networking and network security (Zscaler, Cloudflare, Palo Alto Networks).
2) Leverage of AI in cloud-based communications and collaboration (CCaaS) to the advantage of vendors who are separating themselves from commodity services and pricing (Five9, NICE). Changing competitive landscape as Zoom, Microsoft, and others collide in the large and growing UCaaS market.
3) Further strength in BI / Analytics / Observability to the benefit of vendors with the strongest cloud-based solutions (Datadog, Dynatrace), but more mixed results from vendors transitioning to SaaS (Teradata, Elastic).
