Organon Stock Tumbles To Record Low On Downgrades And Dividend Cut: Retail Optimism Persists

Shares of Organon & Co. fell to a record low on Thursday after a series of analyst downgrades and price target cuts followed the company’s unexpected move to slash its quarterly dividend by more than 90%.

The company declined nearly 27% to $9.45 on Thursday.

Evercore ISI analyst Umer Raffat downgraded the stock to ‘In Line’ from ‘Outperform’, citing the "surprising" dividend cut as a key factor. 

Raffat noted that management's decision to prioritize growth over shareholder returns marks a significant shift, and flagged additional risks related to Organon’s reliance on its European manufacturing network. 

He cautioned that unless the U.S. takes a country-specific approach to tariffs—particularly waiving them for the Netherlands—the company may face margin pressure due to potential tariff exposure.

BofA Securities analyst Jason Gerberry also revised his view, lowering his price target to $10 from $11 while reiterating an ‘Underperform’ rating. 

Gerberry called the dividend reduction a “necessary evil” given the company’s elevated debt levels and lack of near-term pipeline catalysts. 

He said the move makes strategic sense but does little to change the firm’s cautious outlook.

Organon’s board this week declared a revised quarterly dividend of $0.02 per share, sharply lower than its previous $0.28 per share payout. 

The new dividend is payable June 12 to shareholders of record as of May 12. The announcement followed a Q1 earnings release showing $1.51 billion in revenue, in line with Wall Street expectations.

CEO Kevin Ali framed the dividend cut as part of a broader effort to accelerate deleveraging, aiming to bring the net leverage ratio below 4.0x by year-end. 

Ali noted that the company has created a “leaner, more fit-for-purpose” cost structure and is continuing to invest in core growth drivers like Nexplanon and Vtama. 

Organon reaffirmed its full-year revenue and adjusted EBITDA margin guidance and expects to generate over $900 million in free cash flow before one-time costs.

Despite the selloff, investor commentary on Stocktwits reflected a mix of disappointment and cautious optimism. 

Some users criticized management for reversing its previous stance that dividends were the top capital allocation priority, while others viewed the move as a prudent step to improve long-term financial health. 

A few investors even reported increasing their positions, calling the stock “extremely cheap” at current levels.

Sentiment on Stocktwits turned even more ‘extremely bullish’ late Thursday amid a 1,240% jump in 24-hour message volume.

Orgnanon shares have shed 37% of their value so far this year.

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